Daily Clownspeak Report (this one actually is the most vain, stupid statement ever out of a Fed official, and that is no small feat):
<<ST LOUIS, Oct 19 (Reuters) - A Federal Reserve official said on Thursday that the credibility of the U.S. central bank's policies had led to a situation where people believe inflation will stay low.
Jerry Jordan, President of the Federal Reserve Bank of Cleveland, discussed the Fed's inflation-fighting credentials during a conference held by the St Louis Fed at which he paid tribute to Daryl Farncis, former head of the St Louis Fed.
"We've been working very hard on reinstituting the regime where people expect any increase in inflation and interest rates is temporary," Jordan said.
"It will go down because the central bank is on the job."
Jordan drew both parallels and contrasts between now and the late 1960s and early 1970s, when Francis was at the Fed.
He said that unlike now, when policymakers are dedicated to price stability, there was no anchor to monetary policy.
Jordan described Francis in glowing terms as a maverick who stood his ground in asserting that money supply growth needed to be reined in at a time when the majority at the Fed favoured a more lax policy.
Looking at the current economic scenario, Jordan said that the climate of fast productivity growth requires a different evaluation of market interest rates than would be the case during a period of more modest productivity gains.
"Raising a nominal intrabank rate does not necessarily ensure restrictive policy," Jordan noted.
Jordan did not discuss the immediate outlook for the U.S. economy, nor did he address the current stance of Fed policy.
He did, however, take issue with what he saw as a misperception in the financial press and among central bank observers when they comment on Fed increases in interest rates.
"An unfortunate tendency persists in the financial press to assert that the Fed seeks to slow growth in order to prevent inflation -- in spite of every current (Federal Open Market Committee) member declaring that growth does not cause inflation," Jordan, a voting member of the rate-setting FOMC this year, said.
Rather, he said the Fed seeks to promote maximum long-term growth by maintaining stable prices.>> |
