FOMC

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

FOMC/ BoJ votes

The big events next week are the Federal Open Market Committee and Bank of Japan policy votes.

The FOMC decision, due out Wednesday afternoon DC time, is not expected to see further quantitative easing announced. However, the FT’s Gavyn Davies says this does not necessarily mean we’ve seen the last of QE from the Fed: Read more

Robin Harding

I have a piece in today’s paper previewing what promises to be a quiet Federal Open Market Committee meeting this month.

In particular, talk that the FOMC is now studying a programme of “sterilised” quantitative easing is, in my view, incorrect. I think the current FOMC discussion looks more like this: Read more

Robin Harding

Kevin Brady, Texas Republican and vice-chair of the Joint Economic Committee of Congress, will introduce a bill to reform the Fed later this week. The bill, called the “Sound Dollar Act”, would among other things:

  • Give the Fed a single mandate for inflation and require it to monitor gold and other asset prices in defining price stability.
  • Give a permanent FOMC vote to all twelve regional Fed presidents (versus four in rotation — plus the New York Fed president — at present).
  • Require publication of Fed meeting transcripts after three years (versus the current five).
  • Require the Fed to report on the impact of its policies on the dollar.
  • Limit the Fed’s ability to hold assets other than Treasuries and repos outside of a board-declared emergency.

 Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

Bernanke testimony

Fed chairman Ben Bernanke is due to speak on the economic outlook and federal budget situation on Thursday. He’s up in front of the House Committee on the Budget at 10.00 local time (15.00 GMT) on Thursday. Read more

Robin Harding

The new FOMC interest rate forecasts will be released today with the Fed’s Summary of Economic Projections at 2pm. A lot of the commentary suggests that the forecasts of the first rate rise will be heavily clustered in 2014. These are illustrative examples from Credit Suisse: Read more


Ben Bernanke has been very focused on the Fed’s “communications strategy” for several years now, and has patiently pushed the FOMC in his desired direction during a series of detailed discussions. Now it seems that he has reached his destination, and will reveal all (or almost all) in his press conference after the FOMC meeting which begins on Tuesday. Always a fan of explicit inflation targets, the chairman seems finally to have won agreement from colleagues on establishing a formal objective for core inflation of about 2 per cent, though the FOMC will also need to keep Congress happy by talking about its long term unemployment objectives as well. More unconventionally, each member of the FOMC will also publish for the first time their projections for the Fed funds rate extending to 2016.

What is the motivation behind these changes? Mr Bernanke has normally justified such steps in terms of stabilising expectations about the Fed’s genuine intentions, especially on inflation and the forward path for interest rates. At a time when the extension of the balance sheet is causing political difficulties for the Fed, and when inflation expectations could become unhinged by the rapid expansion of the monetary base, the chairman is looking for alternative ways of easing monetary conditions without printing more money. Modern macro-economics suggests that operating on expectations is one of the most powerful tools available to him, though he is using it much more cautiously than many economists would like to see.

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Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

FOMC meeting

The Federal Open Market Committee meets on Tuesday and Wednesday to set monetary policy for the coming month and a half.

The meeting – to be followed by one of chairman Ben Bernanke’s press conferences – could see the FOMC announce an inflation target. This from the FT’s US economics editor Robin Harding: Read more

Robin Harding

On a call with reporters this morning to discuss his new paper “Death of a Theory” (about which more later), James Bullard, president of the St Louis Fed, made some helpful comments about the new rate projections that the Fed will publish at its next meeting. I quoted him in support of rate forecasts in February last year which was well ahead of the game. Today he said: Read more

Robin Harding

Today’s announcement that the FOMC will publish interest rate forecasts from its January meeting is a small surprise. It seemed unlikely there would be time to settle anything at the December meeting; on the other hand, the minutes before a two-day meeting were always a likely time to announce such a move, because it give markets time to prepare for what they’re getting in a few weeks time.

The December minutes are full of clues on the trade-offs that the Fed made in its decision.

(1) The FOMC decided on publishing the existing forecasts of “appropriate” monetary policy made by each committee member. This is not as simple as it seems and was clearly the subject of some debate. Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

FOMC meeting

The highlight of next week’s calendar is Tuesday’s Federal Open Market Committee meeting.

Here’s the FT’s US economics editor Robin Harding on what to expect:  Read more