Jackson Hole Journal: Fischer, Bullard Money Quotes From Day One

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Bullard: Recent Volatility Won't Alter Fed's Outlook

Federal Reserve Vice Chairman Stanley Fischer and regional Fed bank presidents James Bullard, Loretta Mester and Narayana Kocherlakota have taken to the airwaves on the first full day of the central banking conference in Jackson Hole, Wyoming. Here are key remarks from each of their appearances.

Fischer, on CNBC:

“I think it’s early to tell. The change in the circumstances which began with the Chinese devaluation is relatively new and we’re still watching how it unfolds,” he said when asked if he agreed that the case for a September increase is less compelling given market turmoil.

“I wouldn’t want to go ahead and decide right now what the case is -- more compelling, less compelling,” Fischer said. Previously, “there was a pretty strong case, but it was not a conclusion yet, it was a case,” for September liftoff.

“If you don’t understand the market volatility, and I’m sure we don’t understand it now, there are many analyses of what’s going on, it’s, yes, it does effect the the timing of a decision you might want to make,” he said. “But I think they could settle fairly quickly, there is that possibility.”

“We haven’t made a decision yet and I don’t think that we should make a decision. We’re dealing with something which happened about 10 days ago, particularly the change in the circumstances. We’ve got a little over two weeks before we have to make a decision, and we’ve got time to wait and see the incoming data,” he said.

Bullard, the St. Louis Fed president, on Bloomberg Television with Michael McKee and Brendan Greeley:

“I’m not denying it’s a volatile period, it is a volatile period, but let me say this: U.S. fundamentals look good, labor markets look good, we’ve got strong reports on the economy,” he said, citing this week’s upward revision in second-quarter U.S. growth to a 3.7 percent annualized pace. “I think we’ve got a good second half of the year coming.

‘‘The U.S. outlook still looks very good, and the key question for the committee -- and no decisions have been made here -- but the key question for the committee is, How much would you want to change the outlook based on the volatility that we’ve seen over the last 10 days? And I think the answer to that is going to be, Not very much.”

“You’ve really got the same trajectory that the committee will be looking at that we were looking at before, so why would we change strategy -- which was basically to lift off at some point -- based on this volatility?”

“I’ve been arguing that we should get going, because interest rates -- it’s not that we’re a little bit below normal, we’re all the way down at zero, so you’ve got to think about: How is this going to play out over the next two to three years? And we’ve already mapped a course of very low interest rates.”

In comments following on-air interview: “The committee does not like to move when there’s volatility. If we had the meeting this week people would probably say, ‘Let’s wait.’” He then added, “but the meeting is not this week, it’s September 16 and 17.”

Mester of the Cleveland Fed on Bloomberg Television:

“When you look at what the factors figuring into the inflation forecast are, inflation expectations have been relatively stable, we have growth, above-trend growth, we have labor-market improvements continuing.

‘‘Now we do have some shocks, in terms of oil-price shocks, commodity prices, and the appreciation of the dollar, which are deflationary or disinflation factors. But in general, because the economy is doing better and growth is above-trend, I’m reasonably confident that we’re going to get back to 2 percent” inflation.

“I’m in the mode now of looking at all of the data, evaluating -- including what’s going on in the volatility in financial markets,” Mester said. “My view so far in looking at sort of all the factors is that the the economy can sustain an increase in interest rates.”

“You don’t want to wait until your goals are met to start moving off of zero,” Mester said. “We have to be forward-looking.”

Kocherlakota from the Minneapolis Fed speaking on CNBC and on Bloomberg Television:

“Barring big changes in the data between now and September,” Kocherlakota said on CNBC, “I don’t see a near-term increase in interest rates as being appropriate, and by near term I mean really through the course of the rest of 2015.”

“If you lift off interest rates given the inflation outlook that we have, what are people going to conclude? They’re going to conclude, as you were just arguing, the Fed doesn’t think it can hit 2 percent, it’s not really interested in 2 percent.”

“It’s not automatic that we get back to 2 percent,” Kocherlakota said later on Bloomberg Television. “Moves the Fed makes, the decisions we make, influence the credibility of where we’re going to go in the long run.”

“We’re sending the message that we’re very nervous about ever exceeding our 2 percent inflation target, we’re treating it like a ceiling, and that means that the credibility of getting back there is -- I think -- impaired.”

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