HALISTER1: Yellen’s Oct. 14 Speech Was ‘Potential Game Changer’: FTN

Yellen’s Oct. 14 Speech Was ‘Potential Game Changer’: FTN

(Bloomberg) -- Fed Chair Janet Yellen has now joined St. Louis Fed President James Bullard “in questioning the Fed’s accepted way of doing things,” FTN economist Chris Low writes in note.
  • Last Friday’s speech by Yellen was “a must read, a potential game changer”
  • Speech’s title, “Macroeconomic Research After the Crisis,” might have been chosen “to put us to sleep”
    • “Things get exciting pretty quickly” for “the intrepid who make it to the introductory paragraph”
  • Thesis is “potentially revolutionary” in concluding that last recession might be a “turning point” similar to Great Depression and 1970s stagflation era in changing way central banks see the world
  • Common theme in all sections of speech is the possibility that rates should be lower for longer
    • Speech questions conventional wisdom about topics essential to analyzing monetary policy decisions, ranging from the cause of inflation to possibility that a demand shock could have a sustained effect on economy’s supply side
  • Fed’s longer-run fed funds forecast “will almost certainly fall further” as central bank’s economists work through Yellen’s “long list” of questions
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
James Bullard (Federal Reserve Bank of St Louis/MO)
Janet Yellen (Federal Reserve System)
Christopher Low (Ftn Financial)

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