Michael S. Derby

speaker

50 appearances 1 recordings 1 series first heard Jan 2019 last heard Jan 2019

Michael S. Derby’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Fed Members Leaning Away From Interest Rate Increases · 10 Jan 2019 podcast

When he tries to get a sense of whether or not people think inflation is going to go up or down, he looks to inflation expectations data from the markets.

And so he's pointed out that we've had

a lot of points over the last few years where markets and the Fed have had pretty divergent outlooks for the future.

And, you know, eventually those things have to reconcile.

But he's saying that over time, over the last, you know, a good number of years, it's the Fed view.

I'm sorry, it's the market's view on what monetary policy will do that is actually proven to be more accurate.

And right now we have financial markets that expect

No rate rises, and even at various points, they've even priced in Fed rate cuts somewhere out in the later year.

And Jim – sorry, Mr. Bullard would like his colleagues to pay more attention to what the market is telling them.

Well, as we always know when we take stock of this, all Fed officials contribute in a

FOMC deliberation.

So whether or not you have a vote, you still get to make your piece and say what you want to say about what you think monetary policy should do.

But the voting roll does sort of shine a spotlight on the people that have it.

So when every year when the new – it's a complicated dynamic that determines who gets a vote.

But when the new class of voters rotates in, it just shines a spotlight on those people's views and it does –

It's another thing for the chairman to manage as the chairman is trying to forge a consensus about monetary policy.

And at the Fed in particular, having a consensus view on changing monetary policy based on a broad consensus is important.

So there have been times when we've seen lots of dissents, especially during the financial crisis, but that's a pretty rare thing to see at the Fed.

So when you see all the voters tilting in a certain way, it does help add

a little extra emphasis on the idea that that might actually be the way that the Fed goes.

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