Stanley Fisher’s first keynote speech
Eurozone: Economic data continues to slow
United Kingdom: Inflation report suggests 2015 for the first rate rise
United States: Small business confidence improves in July
We have long talked about the role that the recently appointed Vice Chairman of the Federal Reserve Stanley Fisher will play in shaping Fed policy. His speech focused on economic headwinds in the aftermath of the financial crisis, the financial reform agenda, and the utility of various unconventional monetary policy tools. His prepared remarks did not give specific guidance on near-term monetary policy other than to note that for now, “financial stability concerns” do not “warrant deviating from our traditional focus on inflation and employment”.
On the surface, Stan Fischer’s first speech as the Vice Chairman of the Federal Reserve Board might seem a bit depressing. The word “disappoint” (as in disappointing and disappointment) shows up 5 times. The word “slowdown” shows up 8 times, and the word “slow” itself shows up another 8 times. The word “below” comes into play 3 times, while the word “lower” makes an appearance 4 times. And sadly, of the 3 times the word “higher” is used, two of the instances refer to “higher” capital standards for banks while the other references ways we can POSSIBLY “return to ‘higher’ output and productivity growth”. But behind the veneer of “slow, low and below” there is an extremely positive message from Stan. His optimism is subtle and it comes only after he acknowledges some of the structurally gloomy projections.
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