New York Fed president William Dudley expects the Fed to proceed with its asset reduction plan at the September FOMC meeting.
Dudley is upbeat on economy’s underlying trajectory and claims Hurricanes May Have Temporary Effect on Hike Timing.
Federal Reserve Bank of New York President William Dudley said back-to-back hurricanes in the third quarter could temporarily influence the timing of the next interest-rate increase, although above-trend growth does warrant continued gradual rate hikes.
The Fed is expected to announce the start of a gradual process to shrink its $4.5 trillion balance sheet at its Sept. 19-20 meeting in Washington while keeping rates on hold amid a spate of disappointingly weak readings on inflation. U.S. central bankers hiked in March and June, and in June forecast they would raise a third time this year to a range of 1.25 percent to 1.5 percent.
“It’s too soon to judge exactly the timing of when the next rate hike might occur, but I think the path is still clear that short-term rates are going to move gradually higher over time,” he said. While he was marking down his third-quarter growth forecast “a touch” and the storms would affect incoming economic data over the next few months, he was otherwise upbeat on the economy.
“I’m pretty optimistic the expansion’s going to continue. I’m pretty confident it’s going to continue at an above-trend pace, and that’s why I think that as time passes, the Federal Reserve will continue to gradually remove monetary policy accommodation.”
NY Fed President Wants Consumers to Tap Home Equity
Please recall my August 14 article NY Fed President Wants Consumers to Tap Home Equity: Didn’t We Try That Before?
I don’t think homeowners in Houston will be tapping home “equity” anytime soon.
“The good news is that, while the current expansion is quite old in chronological terms, it is still relatively young in terms of the health of household finances,” Dudley said in a speech to the National Retail Federation.
Dudley is clueless at best. Consider this idiotic statement: “Fed’s Dudley: Hurricanes will boost economic activity over the long run”
Mike “Mish” Shedlock
The fed is on autopilot. Barron Trump could be chairman and it would make no difference. Policy is path-dependent; inflation-targeting be damned.
– Ratehike ??? when I look at the 3 month t-bill rate then I don’s see a ratehike anywhere in the (near) future.
Simple, you tap the home equity you would have if your home were not damaged, and you use that to restore your home to its full market value. Would it have been better if you bought flood insurance, because that’s all money you will never see again, assuming you never make a claim, while in the event you do need money to rebuild you borrow the money at low rates. Call it bizarro insurance. You buy it only when you need it.
“Mortgage your house to buy a blouse.” Do these vampires ever quit trying to suck our economic blood?
it requires a PhD and decades of squirreling away in no work gov’t employment to be as dim as Dydly p
So very true of so many with hands on the controls, never having earnt a proper penny through wealth creation……..”squirreling away in no work gov’t employment”
I will believe Dec hike if the odds go up from the measly 36% today. As regards QT, is there a tool to tell us the odds?
Hurricane Effect to Provide Long Run “Economic Benefit”
My god, that only shows how FUNDAMENTALLY clueless they are – Broken Window Fallacy.
I thought it was a spoof.
The Hiroshima bomb was a huge boost to the Japanese economy.
It’s best to ignore anything coming from the FED. It’s obvious their only mandate is to keep the stock market up. They’ll say whatever they must to accomplish it. Sometimes what they say is coincidentally true.
if the Fed is lucky, Florida might have 20% of power restored when the Fed next meets. assuming of course, the roads can be cleaned up to get to places.
the hurricanes will help som ebusinessses-eg Home Depot, and its supply chain. It will hlp construction worlers.
It will be deadly for anybody who has to suddnly pay for anythign and anybody hoping to sell property down ther this winter wil kind of have a hard time
tourism this winter? bring your own camper.
Broken windows, broken homes, broken dikes, broken borders, broken wombs and fifty million dead, its all good!
Broken FED
The Dudley Do Right photo use is genius.
“I’m pretty optimistic the expansion’s going to continue. I’m pretty confident it’s going to continue at an above-trend pace, and that’s why I think that as time passes, the Federal Reserve will continue to gradually remove monetary policy accommodation.”
…
Yeah, sure sure.
More telling is Vice Chairman Fischer bailing … for “personal reasons” … NOW.
…
Stanley Fischer submitted his resignation Wednesday as Vice Chairman and as a member of the Board of Governors of the Federal Reserve System, effective on or around October 13, 2017.
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Dr. Fischer, 73, was appointed to the Board by President Obama for an unexpired term ending January 31, 2020. His term as Vice Chairman expires on June 12, 2018.
https://www.federalreserve.gov/newsevents/pressreleases/other20170906b.htm
Fischer turns 74 Oct 15, I beleive he just said something to the effect ” I am gettin too old for this shit” so his wife said, “so resign, don’t complain”.
Hey, how about we burn down Dudley’s house and see how much of a boost to the economy it has. When the judge asks why we did it we’ll just cite Keynes.
The crushing of retail margins – the amazon effect – continues unabated:
If you love Target for incredible exclusive brands, super-chic collaborations and one-stop shopping for pretty much everything on your list, you’re going to really love this: We’ve lowered our prices on thousands of items, from cereal and paper towels to baby formula, razors, bath tissue and more.
https://corporate.target.com/article/2017/09/save-big-during-target-run
Before you can agree on whether something is good or bad for the ‘economy’, you have to agree on what the ‘economy’ is and how you measure it, don’t you?
Bad things happen every day, like deaths, and toothaches, and accidents, and flat tires, and thefts, and gas gets used up and we need to buy more – all these things create more economic activity. So do wars and natural disasters. Why are the former reasonable and the latter not?
Healthcare is 20% of the economy. Would it be a ‘better’ economy if no one ever got sick, or even if they got sick, they did not seek medical assistance?
Since the beginning of society, an infinite number of bad things have happened – where these all bad for the economy? Was there some ideal economy we would be living in now if no bad things had ever happened?
Before you can agree on whether something is good or bad for the ‘economy’, you have to agree on what the ‘economy’ is and how you measure it, don’t you?
Well – No
There is never a net economic benefit to the unwanted destruction of productive assets.
The carpetbaggers might benefit but the overall economy must suffer.
Boost economic activity?
If you liked hurricanes you’ll love nuclear war.
To the the moon Kim Jong-un!!
Let her rip!!
The Fed is left with one task. Suppress interest rates to allow Treasury to service our 20 Trillion debt. Forget Keynes or any other logic. This is just politics in the Washington cesspool.
Meanwhile the middle class capacity to save is destroyed, along with its new business starts, sending its kids to college and providing for its retirement.
One of my coworkers read the headline that quoted Dudley and the rest reacted with quizzical looks. Finally someone said, “That makes absolutely no sense!” We’re all engineers and know what passes or fails the sniff test.
Well, according to William Dudley we should all pray for more Cat 4-5 hurricanes to save the economy. A few 8.5 earthquakes probably wouldn’t hurt either. Imagine the prosperity that meteor the size football field crashing through the atmosphere would bring.