GDP Release: And Duncan Black Is Shrill!
The Yawning Gap Between Bernanke-1999 and Bernanke-2012 on Appropriate Monetary Policy

Gavyn Davies Asks If the Fed's Doves Are Molting


Gavyn Davies

Fed’s doves lose appetite for easing: The fact that the hawks have lost enthusiasm for more quantitative easing is scarcely surprising, given the fall in unemployment, and the stickiness of inflation. But until very recently the hawks have not been in control of the committee. What is more surprising is that the powerful group of doves which includes Ben Bernanke, Bill Dudley and Janet Yellen, and which normally has disproportionate weight on the FOMC, has also taken QE off the agenda…. The doves seem to have changed their policy conclusion without changing their basic view of the economy. In recent speeches, they have all repeated that the current unemployment rate of 8.2 per cent will remain two to three percentage points above the level consistent with the Fed’s mandate….

Given the doves’ determination to interpret these key issues in the direction of highly accommodative policy, it is hard to explain why they have shelved their desire to introduce another bout of QE. To judge from their underlying economic rationale, they are probably just biding their time while inflation is somewhat above target, and will seek to bring easing back on the agenda as soon as they can.