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I am just wondering, if anyone knows as a general thing, when the FOMC meets to decide on setting the rates, how much sway does the Fed chairman have over the result? Is it possible for him to impose his will on the others, or is it more democratic? Do they usually arrive at something resembling consensus? I suppose I could read through the meeting minutes and transcripts that are publicly available, but I suppose some of you have already done that, so I don't have to.
Woooohoooooo!!! High fives all around!
Moopheus, usually they arrive at a strong consensus, although dissenting views are not unusual. In fact, I think dissenting views have been fairly common.
OTOH, I don't think I've ever seen a Fed decision with the Chairman dissenting. So you could argue the Chairman gets their way.
Best Wishes.
Read "A Term at the Fed: An Insider's View" to get an idea of how it works from a former governer.
Amazon.com: A Term at the Fed: An Insider's View (9780060542719): Laurence H. Meyer: Books
A good little book, not too long. It also gives a view of the dot com bust (during his term) and the 'deflation period' in 2002-2003 (post term).
I don't think the book is full of much propaganda, for instance, he discusses how in the late 90's how their models stopped working and the dissent about that fact. Hmmm, something was afoot, what could it have been ...
The culture of the Fed is such that if the chair ever lost the vote he would probably resign. A single dissenter is fairly common, especially in times of conflicting data and concerns over inflation (i.e. times like this). Multiple dissents are rare.
CR, my "?" is somewhat an editorial comment. (As in, "Did I just hear what I thought I heard?") They do say "likely", so I don't see them as dancing in the streets. But then, for a central bank, maybe this is as close as it gets.
To answer your question, early in his term Greenspan would individually meet with the governers to discuss his (Greenspans) views, thereby insuring consensus (to his view) by meeting time. If I recall correctly, later on he abandoned that approcah (I don't remember exactly, you have to read the book)
I've heard Bernanke solicits opinions from junior memebers, which Greenspan didn't. This makes sense as he's an academic, so I tend to believe he's more of a 'take input and build consensus'.
"Soft landing acheived:
A 747 made a beautiful landing today on a 2500' runway...."
(apart from home sales logging their largest YOY percentage decline EVER)...The big story of the day, in my opinion, isn't to be found by parsing fed language. The big story of the day (silently) is the spread between the 10 year and the 3 month really widened.
4.78 - 5.12 = -.34 (!!!)
dayum, that is sum fugly ass shit, yo.
I think the language on the economy is a setup to Friday's poor GDP number. We want to be sure that after that bit of ugliness (1.5% anyone?) that the Bulls can cheer that 4Q "is certain" to show a rebound. We've already started to hear the 4Q rebound spin the last few days. The games go on.
I see the housing market only started slowing down the economy.
What already slowed down:
What is as it was before:
We have so many interesting things yet to come...
Moopheus, by far the best book on the Fed is William Greider's "Secrets of The Temple," a must read for any serious student of the Federal Reserve.
Actually, I'm somewhat surprised that the committee declared a soft landing "likely." Their optimism seems to be showing.
About optimism. Of course everything coming from from any FED member is optimistic. Because any bad stuff they say will be a self-fulfilling profecy.
The "soft landing" language will be replaced only with "post-recession recovery" language. There is nothing in between.
CR-
Watch the Dallas Fed trimmed mean PCE the next few months. The 6-month annualized figure has increased from 2.4% in March to 3% in August. If the trend continues upward, then I would be very surprised not to see a rate increase after the New Year. Black Monday, Tuesday, Wednesday, Thursday, or Friday will result.
404 Not Found
CR, I think it appropriate to point out that the minutes of the September 20 meeting include the following caveat:
"However, considerable uncertainty was expressed regarding the ultimate extent of the downturn in the housing sector and the degree to which the slowing in housing activity and the deceleration in home prices would affect consumption and other expenditures going forward."
It seems to me that the Fed is simply cheerleading the soft landing scenario. The above quote suggests that they are just as much in the dark as the rest of us are when it comes to forecasting the nature and extent of the fallout from housing.
They're waiting for the other shoe to drop, just as we are.
As the crowded theater grows engulfed in flames, the happy patrons all gathered 'round to warm their hands at the toasty fire.
"Ffff....FFFFfff.....FFFFF........IIIIIIIIII..........FFFFFFIIIIIIIIIII......."
C'mon, Ben, just say it already!
I have question about just how the national median home price is calculated and the implications of reporting a national median. This goes back to the previous posting and a note that the average of the regional declines was much greater than the overall median decline.
If the median national price is just that, this means that markets far above or below the national median have very little effect on the median price. For example, the median in CA is about twice the national median. I assume that this means that a 30% decline in CA prices would have no effect at all on the national median, unless there actually are some CA homes selling for around 200-225K.
I think that the median price may be somewhat representative of a state or even a region, but that the national median might have more limited meaning. Of course, this time around, it seems that we have a truely national bubble, where most states suffering slowing sales and rising inventories.
Bill - the regionals are weighted, I mean there are a whole lot more houses in say the East Coast (NY, NJ) and the West Coast (Cali) than the Midwest (South Dakota)... You shouldn't expect a simple mean of the regional medians to equal the median of the whole.
I hope that's right - if not blame my stupid answer on cheap Merlot. A momentous day like this (official announcement of the 'Royal Soft Landing' deserves a toast... Salute!).
Mission Accomplished?
We ought at least to entertain the possibility that the statement reflects the best guess regarding the outcome. True enough, Fed guys never say "yep, there's a recession coming" but I don't see any evidence they see one right now. If you check median forecasts for the period during which rate hikes already in place should continue to dent output, they are for moderate growth. Median estimates typically miss recessions, but our host has made the point himself that forecasting recession is a mugs game.
I believe there is actually record of a Fed chairman, Volcker, threatening to quit if the FOMC refused to back his wish to hike rates. He won, and stayed in the job.
Economy is still working out on 4.5% fed rate. The 5.25% rate is still in the pipeline.
If anyone is looking for economy stabilization, he must wait at least 6-9 months from last hike, which was in June, until he claims the victory.
I just can't see anything above 1% growth in Q1, which is too little to justify the current account deficit.