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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


« John Berry's Fearless Prediction | Main | Fiddling With "Core" As The Inflation Fires Burn? »

September 20, 2005


What's New?

John Berry was half right.  As you no doubt already know, the Federal Open Market Committee went to Washington, they met, they raised the federal funds rate target again. The "measured pace" language survived, but references to "policy accommodation" did not.  And there was this:

Voting against was Mark W. Olson, who preferred no change in the federal funds rate target at this meeting.

One other item of interest:

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Chicago, Minneapolis, and Kansas City.

Although this might appear to signal that five of the Reserve Bank Boards of Directors were in dissent, this information needs to be interpreted cautiously.  All we know for sure is that these Banks did not submit a request for a 25 basis point increase in the discount rate (the rate the Fed charges banks for direct loans).  We do not know if the Banks not included in this list wanted less or more.  You are, of course, free to draw your own conclusions.

UPDATE: I'm not surprised -- Mark Thoma sees it tooThe New Economist, however, still thinks the statement characterizes monetary policy as accommodativeWilliam Polley keys on the dissent.

MORNING AFTER UPDATE: The statement parsed, at The Big PictureThe Capital Spectator sees the possibility of more of the same, and deeper trade deficits as a result.  William Polley thinks "5% by summer is a real possibility."  The Skeptical Speculator does its usual fine job of putting things in an international perspective. The Prudent Investor says the FOMC's press release "the confident and complacent tone of previous statements".  Forex Rate Currency News characterizes the rate increase as "sheer relief".

September 20, 2005 in Federal Reserve and Monetary Policy , Interest Rates | Permalink

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Comments

Well, the interesting thing is where we go from here.

Bloomberg:

"``Europe is likely to slow sharply on the back of higher oil prices,'' said Stuart Thomson, a fixed-income strategist at Charles Stanley Sutherlands in Edinburgh. ``We expect yields to drop further down.''"

"The yield on the benchmark 10-year German bund fell 3 basis points to 3.06 percent by 8:30 a.m. in London."

Meantime also in London

"U.S. 10-year notes rose for a third day in Europe, the longest gain this month, as climbing oil prices fed concern economic growth will slow......The benchmark 10-year note's yield fell 3 basis points, or 0.03 percentage point, to 4.21 percent at 7:20 a.m. in London, according to bond broker Cantor Fitzgerald LP."

Just how far can Greenspan and co push the envelope?

Posted by: edward | September 21, 2005 at 04:00 AM

Does anyone go to the discount window anymore?

Posted by: bailey | September 21, 2005 at 01:01 PM

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