Fed's Fischer: Political progress has slowed down relative to expectations

Author: Adam Button | Category: Central Banks

Fed's Fischer on CNBC

  • China is doing better, Europe is doing better
  • In Britain nothing has changed
  • The two surprises in CPI were energy prices and a large decline in cell phone usage costs
  • The cell phone price drop was a one-time drop
  • There are reasons to think Q1 growth was below the rate of growth for the rest of the year
  • We're not tied to three hikes
  • Two rate hikes still seems appropriate
  • Bond portfolio run-off will have an effect on the economy
  • Fed will decide on the balance sheet in the next few meetings
  • Stock market volatility of the magnitude we've seen in the past couple years doesn't terrify me but if we see excess volatility we'll see if it needs addressing
  • The Franco-German partnership is the vital part of the European project
  • The markets know how to price the value of the market very well
  • The US dollar has weakened lately, that's useful for the US economy
  • If the dollar strengthens again, we will respond
  • It's important that big banks are subject to the discipline of going bankrupt
  • Those bankruptcies can't be a risk to the economy

We didn't learn much here but he brushed off the soft CPI report and that shows the Fed isn't married to a June hike. He also brushed off a what everyone expects to be a soft Q1.

There was some misinterpretation of the main headline. What he said was "things have slowed down relative to expectations" which some people misinterpreted to mean the economy. The comment was in direct response to a question about the pace of fiscal stimulus, tax cuts and deregulation.