Monday, October 13, 2008

Fed's Fisher pontificates

WSJ headlines are:

Dallas Fed Chief Says Liquidity Facilities Are Temporary

Has eighth inning Fisher gotten anything right on monetary policy? When rates were at 3%, he said this:

So when Fisher told CNBC that “We’re clearly in the eighth inning of a tightening cycle,” he wasn’t just tossing any old baseball analogy at the economy. He was saying he believes Fed monetary policy has done a good job at containing core inflation.

Listen to this pro call the game: “We have the ninth inning coming up at the end of June; we feel strongly we have been getting good, fast, hard pitches right down the pike.” Fisher was of course talking about Fed restraining moves, and he did add that “There is room to tighten a little bit further.” But he finally said that the Fed has “to get rates to a point where you have that stasis — neither stimulating inflation nor discouraging economic growth. We are not quite there yet — we are getting closer and as they say . . . stay tuned.”
http://www.nationalreview.com/kudlow/kudlow200506020912.asp

Then when rates were being cut, Fisher was dissenting, because he was so worried about inflation! Two months ago he said it was 50/50 that price hikes would be "persistent."

In an interview with Dow Jones Newswires published on Tuesday, Mr. Fisher said he was concerned that food and energy price gains may not prove transient and inflationary expectations could become embedded in the economy.

“The real concern I have as a central banker is whether or not (inflation) begins to affect the mentality of spending patterns by consumers (and) pricing patterns by producers,” Mr. Fisher told Dow Jones.

“I don’t know the answer to that question. It’s sort of 50-50” whether the inflation gains will prove a “one-off event,” or something more persistent, Mr. Fisher said.
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080826/REG/860738

At least he has been persistent. Persistently wrong!

Which means that the Fed's alphabet soup lending programs will prove to be stubbornly transitory!

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