The voting members all supported the decision to taper an extra $10 billion a month in the last month that Federal Reserve Chairman Ben Bernanke presided. That’s the first time since June 2011 that a decision has been unanimous, with prior objections coming mostly due to hawks upset with the bond purchases in the first place, but last month due to one official fretting it was too soon to scale back.
Never mind — the January decision brought four different regional Fed presidents — two of whom are ardent hawks (Richard Fisher and Charles Plosser), one who’s a converted dove (Narayana Kocherlakota), and one centrist who will be leaving as soon as the Cleveland Fed can find a successor (Sandra Pianalto).
The bigger changes are still to come, as Janet Yellen is set to become chairwoman, Stanley Fischer and Lael Brainard are set to join the Fed’s board, with room for President Obama to finally name a vice chairman in charge of bank supervision.
This group are all on board with the decision to stop buying bonds. But the real test is when they will want to start lifting interest rates, and how they will communicate that. It’s pretty clear that the Fed’s target of waiting until the unemployment rate gets to 6.5% — even with all the asterisks and hashtags and footnotes attached — is in tatters, now that the jobless rate is at 6.7% and the Fed doesn’t see any reason to lift rates.
MarketWatch
