Fed Vice Chair Clarida speaks in NY
- Fed policy appropriate while watching downside risks
- Fed policy reflects view inflation weakness transitory
- don't dismiss idea trend productivity growth is rising
- inflation still muted, expectations remain stable
- Fed monitoring for persistent shortfall on inflation
- economy in very good place, fiscal policy supportive
- Fed would take material downside risks into account
- if global economic and financial developments present a material downside risk that would take that into account
- Fed must assure policy can sustain maximum employment and price stability for as long as possible
- US inflation is muted, inflation expectations are stable
- lower neutral rates increased likelihood that monetary policy will not provide sufficient accommodation in future downturns
- rising wages do not currently signal rising costs push pressures
- lower structural rate of unemployment means labor market may not be as tight or inflationary pressures as strong as one would expect
- rise in the prime age of labor force participation has restrained inflation, may suggest potential output is higher than many current estimates
- he is seeing a pickup in productivity growth
Clarida is a voting member and is considered to be more of a dove on the Federal Reserve Board. I get the feeling from his comments that he could be easily shifted to a more accommodative policy.