Staff Review of the Economic Situation
The information reviewed for the April 28-29 meeting indicated that real gross domestic product (GDP) only edged up in the first quarter, with growth likely held down, in part, by transitory factors. The pace of improvement in labor market conditions moderated somewhat, and the unemployment rate was unchanged over the intermeeting period. Consumer price inflation continued to run below the FOMC’s longer-run objective of 2 percent, partly restrained by earlier declines in energy prices along with further decreases in non-energy import prices. Market-based measures of inflation compensation were still low, while survey measures of longer-run inflation expectations remained stable.
Payroll employment expanded at a solid pace in the first quarter, on average, but the gain in March was smaller than in earlier months. The unemployment rate remained at 5.5 percent in March, the labor force participation rate edged down, and the employment-to- population ratio was little changed. The share of workers employed part time for economic reasons was also little changed. In the private sector, the rate of job openings edged up in February and was well above its pre-recession level, while the rates of hiring and of quits were about flat and remained slightly above their levels of a year ago.
Industrial production fell in the first quarter, with another drop in the drilling of new oil and gas wells as well as a decrease in manufacturing output that appeared to reflect, in part, the effects of the labor dispute at West Coast ports. Automakers‘ assembly schedules suggested that light motor vehicle production would increase at a solid pace in the second quarter, but broader indicators of manufacturing activity, such as the readings on new orders from national and regional manufacturing surveys, pointed to only modest gains in factory output over the next several months.
Real personal consumption expenditures (PCE) increased in the first quarter, albeit at a much slower pace than in the fourth quarter of 2014. Light motor vehicle sales, as well as the components of nominal retail sales used by the Bureau of Economic Analysis (BEA) to construct its estimate of PCE, rebounded in March after declining in February, suggesting that unusually severe winter weather in February likely held down spending. Among the factors that influence household spending, real disposable income rose strongly, on net, in the first quarter, buoyed in part by earlier declines in energy prices. In addition, further gains in house values and equity prices likely raised households‘ net worth, and the index of consumer sentiment in the University of Michigan Surveys of Consumers remained near its highest level since prior to the most recent recession.
Residential investment increased at a slow pace in the first quarter, and other indicators of housing-sector activity remained weak. Starts and building permits for single-family homes decreased during the first quarter despite small gains in March; starts of multifamily units also declined during the first quarter. Sales of new homes were little changed, on average, over February and March, while existing home sales edged up on net.
Real private expenditures on business equipment and intellectual property products rose modestly in the first quarter, and forward-looking indicators–including data on orders and shipments of nondefense capital goods and the national and regional surveys of business conditions–were generally consistent with only small further gains in the near term. Real spending for nonresidential structures fell considerably in the first quarter, as outlays for drilling and mining structures dropped sharply and outlays for other structures declined.
Real government purchases moved down in the first quarter. Federal spending was flat. But construction expenditures by state and local governments contracted, while these governments‘ payrolls were unchanged.
The U.S. international trade deficit narrowed sharply in February, as imports fell more than exports. Imports of all major categories of goods moved lower as imports from several major trading partners–including Canada, China, Japan, and Korea–registered declines. Disruptions related to the West Coast port labor disputes likely contributed to the decline in imports in February. The reduction in exports was largest for durable goods and industrial supplies, with exports to Canada and China accounting for most of the drop. Despite the narrowing of the nominal trade deficit in February, the BEA estimated that real net exports were a substantial drag on the growth of real GDP in the first quarter.
Total U.S. consumer prices in the first quarter, as measured by the PCE price index, were only 1/4 percent higher than a year earlier, importantly reflecting the decrease in consumer energy prices. The core PCE price index, which excludes food and energy prices, increased 1-1/4 percent over the same four-quarter period, partly restrained by the declines in prices of non-energy imported goods. The PCE price index in February and the consumer price index (CPI) in March rose at a faster pace than in previous months, as energy prices reversed a small part of their earlier declines. Survey-based measures of expected long-run inflation were stable, with the measure from the Desk’s Survey of Primary Dealers unchanged and the Michigan survey measure down a little but still in the range seen over recent years. Market-based measures of inflation compensation at longer horizons increased somewhat but were still low. Over the 12 months ending in March, nominal average hourly earnings for all employees increased 2 percent, somewhat faster than the increase in core consumer prices over the same period.
Economic growth in both advanced foreign and emerging market economies appeared to slow, on balance, in the first quarter of 2015. Global trade and industrial production weakened. Among advanced economies, output growth declined in the United Kingdom and economic indicators for Canada and Japan also pointed to slower growth in the first quarter. In contrast, real GDP growth seemed to have increased in the euro area. In emerging market economies, real GDP growth slowed sharply in China and indicators of activity weakened in Mexico and Brazil, but real GDP growth picked up in some emerging Asian economies. Inflation remained low in most economies, partly as a result of earlier declines in oil prices.
Staff Review of the Financial Situation
Financial conditions eased, on balance, over the intermeeting period. Federal Reserve communications that were reportedly viewed as more accommodative than anticipated put downward pressure on interest rates. A number of weaker-than-expected U.S. economic data releases, including the March employment report, also pushed interest rates lower. On net, measures of inflation compensation rose, equity prices increased somewhat, and the foreign exchange value of the dollar declined.
The expected path of the federal funds rate moved down following the March FOMC statement and the Chair’s postmeeting press conference. Investors reportedly took note of changes in the Summary of Economic Projections, including downward revisions to FOMC participants‘ projections of the appropriate level of the federal funds rate at the end of 2015, 2016, and 2017. During the remainder of the intermeeting period, the expected policy rate path implied by financial market quotes shifted down further, in part because U.S. economic data were weaker, on net, than anticipated. Results from the Survey of Primary Dealers and Survey of Market Participants for April indicated that respondents saw the September 2015 meeting as the most likely time for the first increase in the target range for the federal funds rate; the probabilities attached to scenarios in which policy firming did not begin until after the July 2015 meeting were higher than the corresponding probabilities in the surveys conducted before the March meeting.
Over the intermeeting period, 5- and 10-year nominal Treasury yields decreased, but yields on Treasury Inflation-Protected Securities declined by a greater amount. Measures of inflation compensation over the next 5 years rose significantly, consistent with increases in oil prices and somewhat higher-than-expected February and March consumer price inflation data. Inflation compensation 5 to 10 years ahead also increased but remained at the lower end of its range over the past few years.
On balance, U.S. equity price indexes rose somewhat and option-implied volatility for the S&P 500 index over the next month declined. Energy firms‘ stock prices retraced a small portion of their substantial drop since mid-2014. Spreads of yields on 10-year speculative-grade corporate bonds over those on comparable-maturity Treasury securities narrowed, in part because of a further decrease in spreads on speculative-grade bonds issued by energy firms. About 40 percent of firms in the S&P 500 index had reported earnings for the first quarter, with those reports generally viewed as better than anticipated. Nonetheless, first-quarter earnings per share were expected to be lower than in the previous quarter.
Financing conditions for nonfinancial firms remained accommodative. Corporate bond issuance was strong in the first quarter, and seasoned equity offerings rose. Commercial and industrial loans on banks‘ books again expanded briskly. In the leveraged loan market, issuance of new money loans to institutional investors slowed in the first quarter but stayed robust, supported by continued strong issuance of collateralized loan obligations.
Financing for commercial real estate (CRE) remained broadly available. CRE loans on banks‘ books increased appreciably in the first quarter, consistent with stronger loan demand reported in the April Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS). Issuance of commercial mortgage-backed securities continued to be robust.
Measures of residential mortgage lending conditions were generally little changed over the intermeeting period, and lending volumes remained light. In the April SLOOS, some large banks reported having eased lending standards for a number of categories of residential mortgage loans in the first quarter. House prices continued to rise moderately in February. Nonetheless, estimates of the share of mortgages in a negative equity position were little changed in recent quarters, and they remained elevated when judged against levels prevailing prior to the crisis.
Financing conditions in consumer credit markets stayed generally accommodative. Auto and student loan balances expanded robustly through February. Growth in credit card loans slowed a bit on a year-over-year basis, likely reflecting weaker retail activity.
The U.S. dollar depreciated during the intermeeting period, as U.S. macroeconomic data generally came in weaker than expected, and as market participants appeared to mark down somewhat their expectations for the path of the federal funds rate. Nonetheless, the cumulative appreciation of the dollar since mid-2014 remained substantial. Government bond yields in most advanced foreign economies declined modestly, pushing some yields, particularly in Europe, further into negative territory. By contrast, Greek sovereign yields stayed elevated as the difficult negotiations between Greece and its official creditors continued. Spillovers from Greek markets into other peripheral financial markets remained limited. Equity prices in most advanced foreign economies moved higher, buoyed in part by ongoing monetary policy accommodation. Equity prices also rose in most emerging market economies, with the stock market in China outperforming.
The staff provided its latest report on potential risks to financial stability. A number of factors appeared to limit the vulnerability of the U.S. financial system to adverse shocks. Leverage in the banking system remained relatively low, and increases in household debt stayed modest and continued to be associated primarily with borrowers with strong credit scores. However, some indicators suggested that valuations remained stretched for some asset classes. An estimate of the expected real return on equities moved down, reflecting an increase in stock prices and downward revisions to forecasts of corporate earnings, and corporate bond spreads declined somewhat. The staff also noted changes in the structure of some fixed-income markets that could increase volatility. In addition, the staff discussed the risks to financial stability associated with the possibility of substantial unanticipated changes in longer-term U.S. interest rates, including the scope for a sharp increase in such rates to affect financial conditions in emerging market economies. A number of other risks were noted, including geopolitical tensions and the potential for an increase in financial strains related to the negotiations between Greece and its official creditors.
Staff Economic Outlook
In the U.S. economic forecast prepared by the staff for the April FOMC meeting, real GDP growth in the first half of the year was lower than in the projection prepared for the March meeting, as the data on economic activity received during the intermeeting period were generally weaker than the staff had expected. However, much of this weakness was attributed to transitory factors or statistical noise, with little implication for the pace of expansion beyond the near term. Indeed, the medium-term projection for real GDP growth was revised up modestly, as monetary policy was assumed to be a little more accommodative in this projection and the projected path for the foreign exchange value of the dollar was a little lower. The staff continued to project that real GDP would expand at a faster pace than potential output in 2015 and 2016, supported by increases in consumer and business confidence and a small pickup in foreign economic growth, even as the normalization of monetary policy was assumed to begin. In 2017, real GDP growth was projected to slow toward, but to remain above, the rate of growth of potential output. The expansion in economic activity over the medium term was expected to lead to a gradual reduction in resource slack; the unemployment rate was projected to decline slowly and to move a little below the staff’s estimate of its longer-run natural rate for a time.
The staff’s forecast for inflation in the near term was revised up a little, reflecting the slightly higher-than-expected recent monthly data on core consumer prices and a path for crude oil prices that was a bit higher than in the previous projection. The medium-term forecast for inflation was little changed, with inflation in 2016 and 2017 projected to move closer to, but remain below, the Committee’s longer-run objective of 2 percent, as energy prices were expected to rise, import prices to turn up, and resource utilization to tighten further. Thereafter, inflation was anticipated to move back to 2 percent, with inflation expectations in the longer run assumed to be consistent with the Committee’s objective and slack in labor and product markets projected to have waned.
The staff viewed the uncertainty around its April projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP and inflation were seen as tilted to the downside, reflecting the staff’s assessment that neither monetary nor fiscal policy appeared well positioned to help the economy withstand substantial adverse shocks. At the same time, the staff viewed the risks around its outlook for the unemployment rate as roughly balanced.
Participants‘ Views on Current Conditions and the Economic Outlook
In their discussion of the economic situation and the outlook, meeting participants regarded the information received over the intermeeting period as suggesting that economic growth had slowed during the winter months, in part reflecting transitory factors. The pace of job gains had moderated, and the unemployment rate had remained steady, with a range of labor market indicators suggesting that underutilization of labor resources was little changed. Most participants expected that, following the slowdown in the first quarter, real economic activity would resume expansion at a moderate pace, and that labor market conditions would improve further. Inflation continued to run below the Committee’s longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remained low, while survey-based measures of longer-term inflation expectations had remained stable. Participants generally anticipated that inflation would rise gradually toward the Committee’s 2 percent objective as the labor market improved further and the transitory effects of declines in energy prices and non-energy import prices dissipated. Participants judged that recent domestic economic developments had increased uncertainty regarding the economic outlook. While participants continued to see potential downside risks resulting from foreign economic and financial developments, most still viewed the risks to the outlook for economic growth and the labor market as nearly balanced.
Participants generally agreed that data on private spending for the first quarter had been disappointing, with unexpectedly weak household expenditures and investment spending. Retail sales had continued to be tepid, although consumer sentiment stayed high and auto sales rebounded in March. The recovery in the housing sector remained slow. Business fixed investment softened, in part reflecting sizable reductions in capital expenditures in the energy sector. Exports contracted, likely reflecting the damping influence of the dollar’s appreciation. In combination with a decline in government spending, the weakness of private spending had led to a substantial slowing in economic growth in the first quarter.
Participants discussed whether the weakness of spending in the first quarter primarily reflected temporary factors or instead suggested a longer-lasting loss of momentum for the economy. A number of reasons were advanced for believing that the weakness in spending observed during the first quarter was partly or even largely transitory. Most notably, the severe winter weather in some regions had reportedly weighed on economic activity, and the labor dispute at West Coast ports temporarily disrupted some supply chains. Furthermore, a pattern observed in previous years of the current expansion was that the first quarter of the year tended to have weaker seasonally adjusted readings on economic growth than did the subsequent quarters. This tendency supported the expectation that economic growth would return to a moderate pace over the rest of this year. Participants also pointed to other reasons for anticipating that the weakness seen in the first quarter would not endure. A number of the fundamental factors that drive consumer spending remained favorable, among them low interest rates, high consumer confidence, and rising household real income. In addition, business contacts in several parts of the country continued to be optimistic and expected sales, investment, and hiring to expand over the rest of the year. In the agricultural sector, drought effects had worsened in some parts of the country, but effects on production were limited and planting intentions remained strong. Finally, if the decline in oil prices and the rise in the foreign exchange value of the dollar did not continue, then their influence on the growth rate of investment and the change in net exports would likely recede.
Various reasons were also advanced for believing that some of the recent weakness in the pace of economic activity might persist. A number of participants suggested that the damping effects of the earlier appreciation of the dollar on net exports or of the earlier decline in oil prices on firms‘ investment spending might be larger and longer-lasting than previously anticipated. In addition, the expected boost to household spending from lower energy prices had apparently so far not materialized, highlighting the possibility of less underlying momentum in consumer expenditures than participants had previously judged. Some participants expressed particular concern about this prospect, as their expectations of a moderate expansion of economic activity in the medium term, combined with further improvements in labor market conditions, rested largely on a scenario in which consumer spending grows robustly despite softness in other components of aggregate demand. Participants discussed downside risks to economic growth, and a few indicated that, in their assessment, such risks had risen since the March meeting. However, most participants continued to see the risks to the outlook for economic growth and the labor market as nearly balanced.
In their discussion of the foreign economic outlook, several participants noted that the foreign exchange value of the U.S. dollar had fallen back somewhat over the intermeeting period. Nonetheless, the value of the dollar had increased significantly since the middle of last year, and it was seen as likely to continue to be a factor restraining U.S. net exports and economic growth for a time. It was suggested that one element underpinning the strength of the U.S. dollar was the increasing prevalence of negative interest rates on sovereign debt in some key European economies. Participants also pointed to a number of risks to the international economic outlook, including the slowdown in growth in China and fiscal and financial problems in Greece.
Many participants judged that the pace of improvement in labor market conditions had slowed. The March increase in payrolls had been smaller than expected, and the unemployment rate had remained steady. However, it was noted that the intermeeting period had also witnessed some more-positive news on labor market conditions, including a further increase in the rate of job openings. Various business contacts in energy-related sectors reported layoffs in response to low oil prices, but some information received from business contacts suggested a tightening in labor markets, with shortages of skilled labor reported in some areas and sectors; there had also been an increase in transitions of workers to better-paying jobs. Larger wage gains were also reported in some regions, although in other parts of the country wage pressures reportedly remained muted. One participant suggested that a significant rise in aggregate nominal wage growth should be a criterion in assessing the Committee’s degree of confidence regarding the return of inflation to the Committee’s 2 percent longer-run objective. However, a couple of other participants argued that the behavior of nominal wage growth should not play a significant role in that assessment, on the grounds that there was only a loose relationship between nominal wage growth and inflation in the United States.
Many participants noted that measures of inflation averaged over several months or more continued to run below the Committee’s longer-run objective. However, this shortfall partly reflected the earlier declines in energy prices and decreasing prices of non-energy imports, and some participants pointed out that, by some measures, the most recent monthly inflation readings had firmed a bit. Although participants expected that inflation would continue, in the near term, to be below the Committee’s 2 percent longer-run objective, energy prices were no longer declining and most participants continued to expect that inflation would move up toward the Committee’s 2 percent objective over the medium term as the effects of the transitory factors waned and conditions in the labor market and the overall economy improved further. Survey-based measures of inflation expectations had remained broadly stable. Market-based measures of inflation compensation had risen slightly but remained low. One participant suggested that, in the past, market-based measures of inflation compensation had been of little value in predicting inflation one to two years ahead, and that measures of inflation expectations from surveys of professional forecasters were more useful for forecasting inflation. Another participant argued that low values for market-based measures of inflation compensation should concern policymakers, on the grounds that these low values reflected investors placing at least some likelihood on adverse outcomes in which low inflation was accompanied by weak economic activity.
In their discussion of financial market developments and financial stability issues, policymakers highlighted possible risks related to the low level of term premiums. Some participants noted the possibility that, at the time when the Committee decides to begin policy firming, term premiums could rise sharply–in a manner similar to the increase observed in the spring and summer of 2013–which might drive longer-term interest rates higher. In this connection, it was suggested that the tendency for bond prices to exhibit volatility may be greater than it had been in the past, in view of the increased role of high-frequency traders, decreased inventories of bonds held by broker-dealers, and elevated assets of bond funds. A couple of participants underscored the need for a better understanding of the structure of the bond market in the current environment, including the effect on bond market behavior of regulatory changes. Some participants noted that careful Committee communications regarding its policy intentions could help damp any resulting increase in market volatility around the time of the commencement of normalization. It was also noted that financial stability and the Committee’s macroeconomic goals were likely to be complementary objectives, but different views were expressed about the potential implications for financial stability of monetary policy tightening in current economic conditions.
In their discussion of communications regarding the path of the federal funds rate over the medium term, participants expressed a range of views about when economic conditions were likely to warrant an increase in the target range for the federal funds rate. Participants continued to judge that it would be appropriate to raise the target range for the federal funds rate when they had seen further improvement in the labor market and were reasonably confident that inflation would move back to its 2 percent objective over the medium term. Although participants expressed different views about the likely timing and pace of policy firming, they agreed that the Committee’s decision to begin firming would appropriately depend on the incoming data and their implications for the economic outlook. A few anticipated that the information that would accrue by the time of the June meeting would likely indicate sufficient improvement in the economic outlook to lead the Committee to judge that its conditions for beginning policy firming had been met. Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, al-though they generally did not rule out this possibility. Participants discussed the merits of providing an explicit indication, in postmeeting statements released prior to the commencement of policy firming, that the target range for the federal funds rate would likely be raised in the near term. However, most participants felt that the timing of the first increase in the target range for the federal funds rate would appropriately be determined on a meeting-by-meeting basis and would depend on the evolution of economic conditions and the outlook. In keeping with this data-dependent approach, some participants further suggested that the postmeeting statement’s description of the economic situation and outlook, and of progress toward the Committee’s goals, provided the appropriate means by which the Committee could help the public assess the likely timing of the initial increase in the target range for the federal funds rate.
During their discussion of economic conditions and monetary policy, participants also commented on different concepts of the equilibrium real federal funds rate–that is, a reference value of the inflation-adjusted federal funds rate consistent with the economy achieving, over a specified time horizon, maximum employment and price stability. Estimates of such equilibrium real interest rates were highly uncertain, but some participants reported that their estimates were currently unusually low by historical standards, reflecting, for example, factors weighing persistently on aggregate demand. In light of their low estimates, afew of these participants questioned whether the Committee was providing sufficient accommodation at the present time and cautioned against initiating policy firming in the near future. However, other participants cited factors, including the current low level of term premiums, that might cast doubt on the notion that the equilibrium real federal funds rate was particularly low. Some participants observed that more discussion of this topic was likely to be helpful in assessing these issues. One participant suggested that, in part because of the evidence that the equilibrium real interest rate was low by historical standards, the Committee should discuss the possibility of increasing its longer-run inflation objective. This participant and a few others thought such a discussion could be useful but emphasized that any decision to change the Committee’s longer-run goals and policy strategy should not be made lightly. One of these participants noted, in particular, that a decision to raise the Committee’s longer-run inflation objective might work against the achievement of maximum employment and price stability because such a change could undermine the Committee’s credibility and, in addition, lead to adverse changes in inflation dynamics that could pose significant challenges for policymakers.
Committee Policy Action
In their discussion of monetary policy for the period ahead, members judged that information received since the FOMC met in March suggested that economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggested that underutilization of labor resources was little changed. Although growth in household spending declined, households‘ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remained high. Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined. Inflation continued to run below the Committee’s longer-run objective, but this partly reflected earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remained low, while survey-based measures of longer-term inflation expectations had remained stable. Despite the slower growth in output and employment observed of late, members continued to expect that, with appropriate policy accommodation, economic activity would expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judged consistent with its dual mandate. Members generally continued to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation was anticipated to remain near its recent low level in the near term, but members expected inflation to rise gradually toward 2 percent over the medium term as further improvement in the labor market occurred and the transitory effects of declines in energy and import prices dissipated. In light of the uncertainties associated with the outlook for inflation, the Committee agreed that it would continue to monitor inflation developments closely.
In their discussion of language for the postmeeting statement, members agreed that the wording should reflect their assessment that economic conditions had progressed to a stage at which the Committee’s decision to begin normalizing policy would appropriately be determined on a meeting-by-meeting basis. The Committee agreed that the statement should indicate that the data received over the intermeeting period suggested that economic growth had slowed and to note that this partly reflected transitory factors. The Committee also agreed to change the statement’s characterization of the labor market data to note that the pace of job growth slowed over the intermeeting period and that a number of labor market indicators suggested that there was little change in underutilization of labor resources, and to update the statement’s description of investment and export behavior in light of the recent weaker readings. In addition, members agreed to modify the discussion of inflation developments to indicate that inflation, although no longer declining, was still below the Committee’s longer-term objective and was likely to remain so in the near term, partly because of transitory factors such as earlier declines in energy prices and decreasing prices of non-energy imports. The Committee altered its characterization of the economic outlook to indicate that, while economic growth slowed in the first quarter, the Committee continued to expect that, with appropriate policy accommodation, economic activity would expand at a moderate pace, and that it anticipated that labor market indicators would resume their movement toward levels that the Committee judged consistent with its dual mandate. With respect to the outlook for inflation, members expected inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate.
The Committee agreed to maintain the target range for the federal funds rate at 0 to 1/4 percent and to reaffirm in the statement that the Committee’s decision about how long to maintain the current target range for the federal funds rate would depend on its assessment of actual and expected progress toward its objectives of maximum employment and 2 percent inflation. Members continued to judge that this assessment of progress would take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Members agreed to retain the indication that the Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
The Committee also decided to maintain its policy of reinvesting principal payments from agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions. The Committee agreed to reiterate its expectation that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.
At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the SOMA in accordance with the following domestic policy directive:
„Consistent with its statutory mandate, the Federal Open Market Committee seeks monetary and financial conditions that will foster maximum employment and price stability. In particular, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to undertake open market operations as necessary to maintain such conditions. The Committee directs the Desk to maintain its policy of rolling over maturing Treasury securities into new issues and its policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve’s agency mortgage-backed securities transactions. The System Open Market Account manager and the secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability.“
The vote encompassed approval of the statement below to be released at 2:00 p.m.:
„Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggests that underutilization of labor resources was little changed. Growth in household spending declined; households‘ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high. Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined. Inflation continued to run below the Committee’s longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Although growth in output and employment slowed during the first quarter, the Committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.“
Voting for this action: Janet L. Yellen, William C. Dudley, Lael Brainard, Charles L. Evans, Stanley Fischer, Jeffrey M. Lacker, Dennis P. Lockhart, Jerome H. Powell, Daniel K. Tarullo, and John C. Williams.
Voting against this action: None.
Lesetipp: Die Kamelkurve prophezeit der Welt die Krise
Dubai ist ein Frühindikator für die Welt. Und die Dinge stehen derzeit nicht zum Besten im Wüstenstaat. Warum die „Kamelkurve“ die Krise auch für die Weltwirtschaft ankündigen könnte, lesen Sie in der „Welt“ hier..
Die großen Crashs 1929 und 2008. Warum sich Geschichte wiederholt
Heute erscheint das Buch von Barry Eichengreen „Die großen Crashs 1929 und 2008. Warum sich Geschichte wiederholt“ auf deutsch (englisches Original: „Hall of Mirrors“). Barry Eichengreen ist der Nestor der Crash-Forschung, in seinem Werk analysiert er die Gründe, die zu den Crashs der Jahre 1929 und 2008 führten. Wir haben zu diesem Thema am Freitag ein Interview mit dem Autor veröffentlicht unter dem Titel „Eichengreen: Ein deutscher Marshallplan für Griechenland„.
Hier nun, mit freundlicher Genehmigung des FinanzBuch Verlags, ein Auszug aus der Einleitung des Buches:
Dies ist ein Buch über Finanzkrisen. Es beschreibt die Ereignisse, die
solche Krisen verursachen. Es handelt auch davon, warum Regierungen
und Märkte so reagieren, wie sie es tun. Und es handelt von den
Es schildert die große Rezession von 2008 und 2009 und die große
Depression von 1929 bis 1933 – die beiden großen Finanzkrisen unseres
Zeitalters. Nicht nur in politischen Kreisen weiß man, dass es Parallelen
zwischen diesen beiden Episoden gibt. Viele Kommentatoren haben
beschrieben, wie das Wissen über das frühere Ereignis – die »Lektionen
aus der Großen Depression« – die Reaktionen auf die Ereignisse 2008
und 2009 beeinflusst hat. Weil diese Ereignisse so auffällig denen der
1930er-Jahren ähnelten, lieferte diese Erinnerung an die Vergangenheit
eine Art Objektiv, durch das man sie betrachten konnte. Die Tendenz, die
Krise aus der Perspektive der 1930er-Jahre zu sehen, wurde noch dadurch
verstärkt, dass Politiker von Ben Bernanke – Vorsitzender des Board of
Governors der Federal Reserve – bis Christina Romer – Vorsitzende des
ökonomischen Beratungskomitees des Präsidenten Barack Obama – diese
Geschichte in ihren früheren Karrieren als Akademiker studiert hatten.
Infolge dieser Lektionen verhinderten die Politiker das Schlimmste.
Nachdem die Pleite von Lehman Brothers das globale Finanzsystem an
den Rand des Abgrunds geführt hatte, versicherten sie, dass sie keine
weitere Pleite einer für das System äußerst wichtigen Finanzinstitution
mehr zulassen würden, und sie hielten dieses Versprechen. Sie widerstanden
einer Politik unter dem Motto: »Bettle deinen Nachbarn an«, die in
den 1930er-Jahren den Zusammenbruch der internationalen Transaktionen
verursacht hatte. Die Regierungen erhöhten ihre öffentlichen Investitionen
und senkten die Steuern. Die Zentralbanken fluteten die Finanzmärkte
mit Liquidität und gewährten einander solidarisch Kredite in einer
Weise, die es so noch nie gegeben hatte.
Diese Entscheidungen waren vor allem vom Wissen über die Fehler der
Vorgänger beeinflusst. In den 1930er-Jahren unterlagen die Regierungen
der Verführung des Protektionismus. Sie ließen sich von einem veralteten
ökonomischen Dogma leiten, kürzten ihre öffentlichen Ausgaben
zum denkbar schlechtesten Zeitpunkt und versuchten, ihre Budgets ins
Gleichgewicht zu bringen, als stimulierende Investitionen notwendig gewesen
wären. Es machte keinen Unterschied, ob die betreffenden Politiker
Englisch sprachen, wie Herbert Hoover, oder Deutsch, wie Heinrich
Brüning. Ihre Maßnahmen verschlimmerten nicht nur den Niedergang,
sondern sie scheiterten sogar an der Aufgabe, das Vertrauen in die öffentlichen
Die Zentralbanker hielten an der Idee fest, dass sie nur so viele Kredite
bereitstellen müssten, wie es für die legitimen Bedürfnisse der Unternehmen
erforderlich war. Sie gewährten mehr Kredite, wenn die Wirtschaft
expandierte, und weniger, wenn es einen Rückgang gab, womit sie Booms
und Krisen noch verstärkten. Sie vernachlässigten ihre Verantwortung für
finanzielle Stabilität und schritten nicht als Kreditgeber in Notfällen ein.
Das Ergebnis war ein sprunghaftes Ansteigen von Bankenpleiten und ein
verkümmerndes Kreditgeschäft. Man ließ zu, dass die Preise kollabierten
und Schulden nicht mehr zu managen waren. Milton Friedman und
Anna Schwartz geben in ihrem einflussreichen Werk über die Geschichte
der Geldpolitik den Zentralbanken die Schuld an diesem Desaster. Sie
kommen zu dem Fazit, die unfähige Politik der Zentralbanken sei mehr
als jeder andere Faktor für die ökonomische Katastrophe der 1930er-Jahre
Da die Verantwortlichen die Lektionen aus dieser früheren Episode gelernt
hatten, gelobten sie, es diesmal besser zu machen. Wenn damals die
Welt in Deflation und Depression gestürzt war, weil ihre Vorgänger weder
die Zinsen gesenkt noch die Finanzmärkte mit Liquidität geflutet hatten,
würden sie diesmal mit einer expansiven Geld- und Finanzpolitik reagieren.
Wenn die Finanzmärkte zusammengebrochen waren, weil ihre Vorgänger
panische Anstürme auf die Banken nicht verhindert hatten, würden
sie auf ganz entschiedene Weise mit den Banken umgehen. Wenn
Bemühungen, den Staatshaushalt auszugleichen, den Niedergang in den
1930er-Jahren verstärkt hatten, würden sie finanzielle Anreize schaffen.
Wenn der Zusammenbruch der internationalen Kooperation die Probleme
der Welt verschlimmert hatte, würden sie persönliche Kontakte und
multilaterale Institutionen nutzen, um sicherzustellen, dass es diesmal
eine angemessene Koordination politischer Maßnahmen gab.
Als Resultat dieser ganz anderen Reaktionen erreichte die Arbeitslosenquote
in den USA 2010 einen Spitzenwert von 10 Prozent. Das war
immer noch besorgniserregend hoch, aber die Quote lag doch weit unter
den katastrophalen 25 Prozent während der großen Depression. Hunderte
Banken gingen pleite, aber nicht Tausende. Es gab viele Verwerfungen
an den Finanzmärkten, aber deren völliger und äußerster Kollaps wie in
den 1930er-Jahren wurde mit Erfolg abgewendet.
Das war nicht nur in den USA so, sondern auch in anderen Ländern.
Jedes unglückliche Land ist auf seine eigene Weise unglücklich und ab
2008 gab es unterschiedliche Grade der wirtschaftlichen Unzufriedenheit.
Aber abgesehen von einigen fehlgeleiteten europäischen Ländern erreichte
dieses Unglück nicht das Niveau der 1930er-Jahre. Weil die politischen
Maßnahmen besser waren, fielen die sozialen Verwerfungen, die
Schmerzen und das Leid geringer aus.
So sagt man jedenfalls.
Diese nette Geschichte ist leider zu einfach.
Sie lässt sich nicht mit der Tatsache in Einklang bringen, dass man die
Risiken nicht antizipiert hat. Bei einem Besuch der London School of
Economics 2008 hat Königin Elisabeth II. eine später berühmt gewordene
Frage gestellt: »Warum hat das niemand kommen sehen?«, fragte sie
die versammelten Experten. Sechs Monate später schickte eine Gruppe
prominenter Wirtschaftswissenschaftler der Königin einen Brief und entschuldigte
sich für »den Mangel an kollektiver Fantasie«.
Die Architekten des Euro waren sich dieser Geschichte bewusst. Man erinnerte
sich sogar noch intensiver an sie, weil 1992 bis 1993 der Wechselkursmechanismus
zusammenbrach, der die europäischen Währungen
miteinander verband wie ein Seil eine Gruppe von Bergsteigern. Daher
bemühten sie sich um ein stärkeres währungspolitisches Arrangement.
Es sollte auf einer Einheitswährung basieren und nicht von den Wechselkursen
zwischen einzelnen Landeswährungen abhängig sein. Die Abwertung
einer Landeswährung sollte nicht mehr möglich sein, weil die einzelnen
Länder dann keine nationale Währung mehr haben würden, die sie
abwerten könnten. Dieses Euro-System sollte nicht von nationalen Notenbanken
reguliert werden, sondern von einer supranationalen Institution,
der Europäischen Zentralbank.
Wichtig ist, dass der Vertrag zur Einrichtung der Währungsunion keine
Möglichkeit zum Ausstieg vorsah. In den 1930er-Jahren konnte ein Land
durch eine unilaterale Entscheidung seiner nationalen Legislatur oder seines
Parlaments den Goldstandard abschaffen. Im Gegensatz dazu wäre
die Abschaffung des Euro in einem Land ein Vertragsbruch und würde
das gute Verhältnis dieses Landes mit seinen Partnerstaaten innerhalb der
Die Architekten des Euro vermieden zwar einige Probleme des Goldstandards,
sorgten dafür aber für andere Probleme. Indem das Euro-System
ein trügerisches Bild der Stabilität schuf, setzte es große Kapitalströme in
die südeuropäischen Länder in Gang, welche schlecht dafür gerüstet waren,
mit ihnen umzugehen – wie schon in den 1920er-Jahren. Als diese
Ströme die Richtung wechselten, führten die Unfähigkeit der nationalen
Zentralbanken, Geld zu drucken, und der nationalen Regierungen, sich
dieses Geld zu leihen, zu tiefen Rezessionen – wie schon in den 1930er-Jahren.
Der Druck, etwas zu verändern, wurde immer stärker. Die Unterstützung
von Regierungen, die das nicht taten, wurde schwächer. Es häuften
sich die Prognosen, der Euro werde ebenso scheitern wie der Goldstandard;
Regierungen in notleidenden Ländern würden ihn verlassen. Und
falls sie zögern sollten, dies zu tun, würden sie von anderen Regierungen
und politischen Führern abgelöst werden, die zum Handeln bereit wären.
Schlimmstenfalls könnte sogar die Demokratie in Gefahr sein.
Es stellte sich heraus, dass dies ein falsches Verständnis der Lehren aus
der Geschichte war. Als Regierungen in den 1930er-Jahren den Goldstandard
aufgaben, waren der internationale Handel und das Kreditwesen
schon zusammengebrochen. Diesmal taten die europäischen Länder gerade
genug, um dieses Schicksal zu vermeiden. Daher musste man den
Euro verteidigen, um den gemeinsamen Markt, den Handel innerhalb
Europas und den Zahlungsverkehr zu bewahren. In den 1930er-Jahren
zählte die politische Solidarität zu den frühen Opfern der Depression.
Trotz der Belastungen durch die Krise setzten die Regierungen diesmal
ihre Konsultationen und ihre Zusammenarbeit mithilfe internationaler
Institutionen fort, die stärker und besser entwickelt waren als die
in den 1930er-Jahren. Die wirtschaftlich und finanziell starken EU-Länder
vergaben an ihre schwachen europäischen Partner weiterhin Kredite.
Diese Kredite hätten zwar höher sein können, aber verglichen mit den
1930er-Jahren waren sie dennoch umfangreich.
Und schließlich kam es nicht zu einer Krise der Demokratie, wie sie
diejenigen prognostiziert hatten, die mit dem Kollaps des Euro rechneten.
Es gab Demonstrationen, auch solche, bei denen es zu Gewalttaten kam.
Regierungen stürzten. Aber anders als in den 1930er-Jahren überlebte
die Demokratie. Die Kassandras des Zusammenbruchs hatten die Wohlfahrtsstaaten
und die sozialen Sicherheitsnetze übersehen, die infolge der Depression
aufgebaut worden waren. Sogar dort, wo die Arbeitslosenrate
bei mehr als 25 Prozent lag, wie es in den am schlimmsten betroffenen
Teilen Europas der Fall war, kam es nicht zu offenkundiger Verzweiflung.
Das schwächte die politische Gegenreaktion. Es begrenzte den Druck, das
bisherige System zu verlassen.
Es ist allgemein bekannt, dass die Erfahrung der Großen Depression
die Wahrnehmung und die Reaktionen auf die große Rezession stark
geprägt hat. Aber um zu verstehen, wie diese Geschichte genutzt – und
missbraucht – wurde, muss man sich nicht nur die Depression genauer
ansehen, sondern auch die Entwicklungen, die sie ermöglicht haben. Wir
müssen also ganz am Anfang beginnen, nämlich im Jahr 1920.
Verwirrung um Lagardes Grexit-Aussagen: IWF bringt Korrektur
Von Markus Fugmann
Hat sie oder hat sie nicht? Das ist hier die Frage – der IWF sagt nun: sie hat nicht. Gemeint sind die Aussagen der IWF-Chefin Lagarde gegenüber der „FAZ“. So wird ihr Satz allgemein so zitiert:
„Der Austritt Griechenlands ist eine Möglichkeit“, würde aber nicht das Ende der Eurozne bedeuten („likely not spell the end of the
Doch taucht ein wörtliches Zitat in dem Artikel der „FAZ“ gar nicht auf.
Nun hat der IWF gestern eine Richtigstellung der Äusserungen Lagardes herausgebracht, „to clarify and put into context the quotes reported in the FAZ
interview.“ Das Interview der „FAZ“ mit Lagarde wurde in englischer Sprache durchgeführt, der IWF hat die Aussagen Lagardes nun gestern im Original veröffentlicht.
Nun hat ein Sprecher des IWF auf Nachfrage einer Nachrichtenagentur klar gemacht, dass Lagarde in dem Interview weder das Ende der Eurozone noch das Ende des Euro in dem Interview erwähnt habe. Ofefnkundig versucht also der IWF, die Wellen, die das Interview mit der „FAZ“ aufgebracht hat, wieder zu glätten. Man ist nervös – auch und gerade beim IWF..
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