Från MorganStanleys US chefsekonom
Einstein on the Fed
Vincent Reinhart (New York)
Federal Reserve officials right now must be thinking about the definition of insanity apocryphally attributed to Albert Einstein: “Insanity is doing the same thing over and over and expecting a different result.” Over the past few weeks, Ben Bernanke and his colleagues have said the same thing over and over and no longer know what to expect from investors.
The message they repeat rests on three pillars.
1. The application of their two policy tools—the projected path of the policy rate and the pace of asset purchases—is determined by an assessment of the expected marginal benefits and costs of each.
2. A decision on one of those instruments does not necessarily have an implication for the other.
3. All decisions depend on incoming data and are thereby subject to revision.
The particular application of these three principles has roiled markets ever since Chairman Bernanke put tapering of asset purchases on the table in his appearance before the Joint Economic Committee in May.
The message has been the same ever since. Fed officials are desirous to see the back of asset purchases but are willing to keep the policy rate pinned to its zero lower bound for a very long time. The long form of this guidance is that:
· The diminishing marginal benefit and increasing marginal costs of QE make it appropriate to slow the increase in accommodation from that instrument soon (applying Pillar 1),
· the data run in line with their expectations of sustained gains in employment (applying Pillar 3).
· such a decision has no necessary implication for the date at which they first start raising the funds rate target (applying Pillar 2).
In the event, market participants took a while to work through this chain of reasoning.
Fed officials thought the sheer repetition that their balance-sheet and interest-rate decisions are separate would allow them to move on the former without perturbing expectations about the latter. They even wrapped the news in a dovish package, stating that tapering might come sooner than expected but was also going to be more gradual than expected. Moreover, they relayed that they probably will never sell assets.
Perhaps they tried too hard. They probably down-played the thought that they were losing their religion on QE so as to preserve the option value of resorting to it again should the economy roll over. They were nonchalant toward disinflation so as to keep the window before they could begin to taper as narrow as possible. This raised the suspicion of market participants that the Fed was stepping down the application of a useful instrument because they thought it was no longer needed. If this were the truth about the Fed’s view on the economy and disinflation, then it should shape the Fed’s thinking on its other policy instrument and the date they first raise rates. In fact, the minutes of the June meeting showed that they are only slowly walking away from the asset purchase program, even though one-half of FOMC participants would end it within the year.
Tapering is old news. Unless the employment report turns soft and derails the Fed’s train, QE purchases will be slowed at the September meeting. Purchases should rumble to a stop, on net, by next June. The important news from Fed officials is that they intend to hug the zero lower bound until the unemployment rate hits 6-1/2 percent, and that will not be until 2015. And if market participants push the date nearer in time, the Fed will protest by acknowledging the extent that inflation has fallen.
Det intressanta på sistone tycker jag är att det inte bara går att säga att går räntorna upp, går aktier upp, eller ner, för den delen. Bra data driver kurserna, att Fed bedyrar att tapering QE absolut inte har något med räntesättningen att göra är också positivt för kurserna. Det är lite motsägelsefullt. Bra data knnebär ju bättre konjunktur, och högre risk för räntehöjning, och uteblivna räntehöjningar innebär ju en återhållsam förbättring av konjan. Som jag varit inne på tidigare gör man bäst i att hålla koll på realräntornas utveckling.