Two apparently 'dovish' voting members of the FOMC
in 2017, Evans and Kashkari, were replaced by the 'hawkish' Mester and Mullinix, joined by the lately rate-hike-friendly so-called 'centrist' Williams.
How does the FOMC
transmit macroeconomic expectations?
To answer this question, we examine how uncertainty about future interest rates, as measured by options prices from financial markets, changed after the FOMC
began releasing its participants' projections for the appropriate federal funds rate.
The process of scaling back accommodation has so far proceeded at a slower pace than most FOMC
participants anticipated in 2014.
Markets are waiting as the FOMC
meeting nears, to decide on interest rate increase.
The more fundamental reason for the shift in policy trajectory is the ongoing change in how most FOMC
participants view the key parameters of the economy.
last raised the federal funds target rate to a range of 0.
These data-dependent changes likely give the FOMC
more leeway in its normalization program," he said.
enjoys a legal mandate that shields its discretion to a remarkable degree.
has 19 members: 7 board of governors and 12 Federal Reserve Bank presidents.
For example, FOMC
members once again showed concern over a possible decline in future inflation readings, alongside indicating downside risks have increased in China, Japan and Europe.
1) The FOMC
ordinarily meets eight times per year and at each meeting votes on a directive that governs the conduct of monetary policy during the period between meetings.