Fed Chair Janet Yellen said at the end of August that given the continued recovery in the job market, the outlook for economic growth and inflation has turned positive, and conditions are increasingly ripe for interest rate hikes. However, there appears to be no consensus among Fed officials on the long-term monetary policy framework. Alliance Bernstein believes that the Fed's reluctance to adopt a new monetary policy mechanism will only allow the economy and financial markets to continue to be swayed by past events. Kansas Federal Reserve Bank Annual Meeting At the end of August, the Federal Reserve Bank of Kansas City held its annual economic seminar in Jackson Hole, Wyoming. This year's theme was "Developing a Sound Monetary Policy Framework to Prepare for the Future." Federal Reserve Chair Janet Yellen's opening speech was titled "The Federal Reserve's Monetary Policy Options: Past, Present, and Future". Assessing the direction of the policy, it said: "Based on the continued stability of the labor market, coupled with the improved outlook for economic activity and inflation, I believe the conditions for raising interest rates have gradually matured in recent months.
Yellen's remarks were blunt, a departure from past style and a marked departure from her rhetoric at the FOMC meeting in June, when she noted that the Fed was still closely monitoring the job market and looking for the economy. Momentum shows no signs of abating. Should we look at data to determine policy? Since the June policy meeting, the number of new employment has grown strongly for three consecutive months; it reached 271,000 in June, 275,000 in July and 151,000 in August. In view of the fact that the company's recruitment model has never shown number list a linear development, AllianceBernstein believes that the growth rate of new employment in recent months is not particularly important. From the data point of view, it is an indisputable fact that the new population data of the job market has performed quite well and is higher than the average, but should the Fed adjust its decision-making mechanism because of these factors? From Yellen's remarks, it can be seen that when she and the Open Market Committee are making policy decisions, they still generally "focus on data", observe changes in monthly data, and take appropriate countermeasures.
Alliance Bernstein believes that such a decision-making method is flawed, because overemphasizing the next economic data means that the latest preliminary data is more important than the previous data, and it also ignores the trend of data evolution. Former Federal Reserve Governor Kevin Warsh agrees. In March, before speaking at the National Association for Business Economics, Washer said: "There are probably many words that are more dangerous than 'data' when it comes to the execution of monetary policy right now, but people mention it. No other word can compare with the frequency and enthusiasm. Allow me to discuss here the drawbacks of using data as a policy guideline. The “data” available to policymakers is not instant and has to wait until an agency such as the Bureau of Labor Statistics or the Department of Commerce It's 'data' when it's said. . . Because of this, data is often out of date, only looking at the past, and may need to be significantly revised." long term Yellen's speech also focused on the Fed's future policy options; it explored whether official interest rates and other measures will limit the influence of monetary policy so that it will not be effective in the event of another recession.