HALISTER1: FOMC in Holding Pattern; Yellen May Echo Williams’s Views: UBS

FOMC in Holding Pattern; Yellen May Echo Williams’s Views: UBS

(Bloomberg) -- Yellen may discuss long-term implications of a lower neutral rate in her Aug. 26 Jackson Hole speech, UBS economists Dave Liang, Drew Matus, and Samuel Coffin write in note.
  • Fed chair should also address recent global developments, data releases, and their influence on policy normalization
  • She may “echo the sentiment” of SF Fed Pres. John Williams, who questioned efficacy of targeting low inflation in a low-rate environment
    • NOTE: In economic letter released Mon., Williams called for steps such as possible higher inflation target or nominal GDP targeting to mitigate impact from lower natural rate of interest
  • Minutes of Fed’s July mtg suggest FOMC is “in a holding pattern”; desire for more “proof of economic life strongly suggests” next rate hike is more likely in Dec. than Sept.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Drew Matus (UBS Asset Management Japan Ltd)
John Williams (Upland Resources Inc)
Samuel Coffin (UBS Global Asset Management Japan Ltd)
David Liang (UBS Securities LLC)

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