Sunday, September 16, 2007

Counting FOMC Votes (Sept 18, 2007)

OK, got your coffee and a sharpened pencil? It's accounting time.

Below are all the members of the FOMC, starting with the ones who have votes. Links are to the most recent speech they've given after August 10, and to any relevant posts here.

For simplicity, I'll assume they've only got a choice between cutting 25bps and 50bps. Next to each name I've listed my best guess, if I have one, for which policy they'd prefer, along with a recent sound-bite that I think summarizes their main concern.

Board of Governors
Ben Bernanke: 50bps, "deterioration in financial market conditions ... increased the downside risks to growth."
Donald Kohn: 50bps.
Randall Kroszner: 50bps, "financial stress... has spread to other markets"
Frederic Mishkin: 50bps, "potentially adverse implications for real activity"
Kevin Warsh: ?

Regional Fed Presidents with votes:
Timothy Geithner, New York: ?
Eric Rosengren, Boston: ?
Charles Evans, Chicago: ?
Thomas Hoenig, Kansas City: 25 bps, "the economy is doing reasonably well"
William Poole, St. Louis: 25 bps, "There’s no need ...unless there’s some sort of calamity taking place"

Regional Fed Presidents without votes:
Sandra Pianalto, Cleveland: ?
Charles Plosser, Philadelphia: 25 bps, "the economy is remarkably resilient"
Richard Fisher, Dallas: 25bps, "Our economy appears to be weathering the storm"
Gary Stern, Minneapolis: ?
Jeffrey Lacker, Richmond: 25bps, "risks to economic growth appear to be relatively minor"
Dennis Lockhart, Atlanta: 25bps, "I would like to see inflation sustained at a somewhat lower rate"
Janet Yellen, San Francisco: 50bps, "increased downside risks"

That still leaves a lot of question marks, but among the Governors (plus Yellen) concern seems to be centered around the potential for a seize-up in the banking sector to negatively impact the real economy, and the importance of short-circuiting that process.

Most of the hawkish talk has come from the regional Fed presidents, though mostly the non-voters, who have yet to see much actual impact on the real economy.

I'm in the minority, but I expect 50bps.


psummers said...

I'd put Hoenig in the 25bps camp. I could be wrong (have been before!), but he's an inflation hawk and my feeling is that the KC district hasn't been as hard-hit as some others by "the recent financial market turmoil."


Marc Shivers said...

psummers: After reading though Hoenig's Sept 6 NBR interview (link added above), I agree with you, he's pretty clearly in the 25bp camp.