Press conference w/Bullard: embargoed until end of talk. [everything is a paraphrase here, and I can’t get everything down, as with everything at this conference]
Neo-Fisherian ideas are interesting and worthy of further talking about, but don’t take them too seriously.
The longer you are at a zero bound — the neo-Fisherian effects get larger.
Q: new monetary consensus of a low nominal world. Won’t the abnormal become normal?
B: ECB and Japan still doing QE. We are now trying to normalize.
Q: Balance sheet. edging up rates?
B: liftoff, then review the balance sheet. Gradualism will be the normal policy, more shallow than 1994 or 2006. Won’t have credibility on gradualism until the second move. More on gradualism — not a constant slope, but state-dependent.
Q: [Bloomberg] Why go gradually?
B: He has higher dots. Forecasts lower unemployment. Need to see how things evolve.
Q: Wan’t it difficult for the Fed to veer from prior policy moves?
B: You have to retain your options, and move accordingly. Labor markets could tighten considerably.
Q: [Dow Jones] Any concern that you will have unanticipated effects on the ECB and World?
B: No. Those are priced in anyway.
Q: keeping the markets calm?
B: we won’t give a total roadmap, we can’t. It won’t be like 1994. We will communicate more.
Q: Chorus of criticism from the GOP?
B: Fed has been in the middle of the action since the crisis. Adds to a healthy debate on priorities for monetary policy. What should we have has targets…
Q: Is the FOMC shifting its official inflation measure? Dallas Fed Trimmed Mean?
B: Trimmed mean is better statistically. Target should be overall inflation.
Now it is time for Lacker
Jury is still out on how we handled on 2008-9. Not surprised on the political furor.
Q: What will happen when FOMC raises rates?
L: should be smooth. News will be in the announcement. Shouldn’t be a surprise.
L: My dots are above median. Should be a flatter cycle.
Q: Regarding his paper, if the price level is all that matters, why not have the 2% more prominent?
L: Can’t reject the possibility that chance is keeping inflation low, and a slow-moving component. Communications are pretty clear now.
Q [marketwatch] FOMC behind curve?
L: We might be, we might not.
Q: Possible that Fed won’t be gradual?
L: Possible. Consider inflation 2003-2004 to 2007, we got behind on inflation.
Q: any reform ideas you might support?
L: IOER given to Board, should go to the FOMC.
Q: should a Taylor rule be mandated?
L: wouldn’t mandate it, we even consider them, and maybe we should discuss why we differ from them.
Q: your view on the balance sheet?
L wind down quickly, if possible.
Q: my question on whether globalization and technology affecting the labor share and thus monetary policy?
L: models could take account of that if they wanted to — depends what you think the goals of policy are. If inflation only, a focus on employment might have an effect, or we could end up pursuing pushing for unemployment that we can’t achieve.