February 6, 2017

IT'S A DEFLATIONARY EPOCH:

The 'data-dependent' Fed has made a habit of using the same data to hike, not hike, and caution about future hikes (Komal Sri-Kumar, 2/06/17, Business Insider)

When the Fed hiked rates in December, it concluded that "near-term risks to the economic outlook appear roughly balanced" in justifying a 1/4 point increase.  Last Wednesday, this statement was left unchanged, but the Fed decided to pass on a further rate hike.  Go figure!  Nothing surprising here as the "data-dependent" Fed has made a habit of using the same set of data to hike, not hike, or just caution investors about future hikes, as it pleases.  All the more reason for giving markets more clarity about policy with a rules-based approach such as adoption of the Taylor Rule.

Every rate hike since Greenspan's disastrous one in '87 has been driven by emotion, not data.

Posted by at February 6, 2017 7:53 AM

  

« DEFINING THE CONTRIBUTION INSTEAD OF THE BENEFIT: | Main | THANKS, W: »