Wednesday, September 24, 2014

Fed More Dovish Next Year?

No one will accuse the Fed of being very hawkish after exanding its balance sheet by $4 Trillion and keeping 0% interest rates for years with no end in sight. But there are two members who vote this year that are viewed as more likely to raise rates. This Dallas Morning News article notes that Dallas Fed Chief Richard Fisher and Philly Chief Charles Plosser will soon retire and their voting term ends this year. 

Some quotes from the article:

"The Federal Reserve Bank of Dallas has hired a search firm to help find a replacement for President Richard W. Fisher, who has said he plans to retire next year."

"Fisher will be one of two Fed hawks to retire next year, which could reduce pressure on the central bank to speed up its plan to raise interest rates. On Monday, Philadelphia Fed President Charles Plosser, 66, said he plans to retire in March."
"Both Fisher and Plosser have criticized the Fed’s loose monetary policy and want the central bank to start raising interest rates sooner than the estimated time frame of mid-2015 as the economy continues to improve. In Fisher’s 10-year tenure at the Fed, he has dissented from policy decisions eight times — including at the central bank’s last meeting earlier this month. Plosser has dissented six times in his eight years at the Fed, including at the last two meetings."
My added comment: While not much will probably change at the Fed, it is likely that the voting block at the Fed next year will have an even more dovish bias. So speculation that interest rates will be rising may be premature.

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