Page 25 - AT

BUSINESS Monday 13 January 2020
A25

2014 Fed conundrum:

How to alert markets

rates were going up

By MARTIN CRUTSINGER and ket overreaction, the panel
CHRISTOPHER RUGABER decided to emphasize that
AP Economics Writers this change in wording was
WASHINGTON (AP) — In her "consistent" with the Fed's
first year as Federal Reserve previous statements that
chair, Janet Yellen presid- said it planned to keep
ed over a policy panel di- rates at their current low
vided over the issue of how "for a considerable time."
much longer the central The committee approved
bank could afford to keep this change on a 7-3 vote, a
its benchmark interest rate highly unusual split for such
at a record low, and how a relatively modest change
to prepare financial mar- in the policy statement.
kets for the start of rate One of the dissenters, Rich-
hikes. ard Fisher, then president In this Aug. 14, 2019, file photo former Fed Chair Janet Yellen speaks with FOX Business Network
According to transcripts of the Fed's Dallas regional guest anchor Jon Hilsenrath in the Fox Washington bureau in Washington.
of the Fed's discussions re- bank, argued in the meet- Associated Press
leased Friday, Yellen and ing that he believed im-
the majority of the panel provements in the econ- Lewis Carroll's "Through the next two meetings. global economies slowed
debated the reasons that omy's performance since the Looking Glass," where The panel ended up adopt- in 2019. The Fed cut rates
inflation remained stub- October had moved for- Humpty Dumpty says, ing the wording that Yellen three times in 2019.
bornly below the Fed's 2% ward the timing of when "When I use a word, it had backed, a move sup- That led President Donald
target even as unemploy- the Fed would need to start means just what I choose ported by Jerome Powell, Trump, who tapped Powell
ment kept falling. raising interest rates. it to mean — neither more who was then in his third to succeed Yellen, to com-
The transcripts showed Fed Richard Plosser, then head nor less." year on the central bank plain that the central bank
officials struggling to adopt of the Philadelphia Fed Yellen, for her part, noted and would end up suc- had raised rates too much
a modest change in word- and another dissenter, ob- that while the panel had ceeding Yellen as Fed and hurt the economy and
ing to their policy state- jected to using any word- a "range of views" on how chairman in February 2018. the stock market.
ment at the December ing that linked the first rate to reword the policy state- As 2015 unfolded with con- The Fed releases a policy
2014 meeting. They sought hike to a passage of time, ment, she said she appreci- tinued low inflation, the Fed statement immediately fol-
to alert financial markets given the improvements ated the panel's willingness ended up not hiking rates lowing its eight meetings
— without causing alarm — already being seen in the to find common ground so until December of that each year and, under a
that the Fed might start rais- economy. the Fed could "communi- year, with the Fed waiting process started by Powell,
ing its key policy rate in 2015 By contrast, Narayana Ko- cate our policy intentions another full year before it also holds a news confer-
after keeping that rate at a cherlakota, then head of to the public as clearly as boosted rates by another ence after every meeting.
record low near zero since the Minneapolis Fed, said possible." small quarter-point in De- Three weeks after the
the depths of financial crisis by signaling possible rate She told the panel that cember 2016. meetings, the Fed releases
in December 2008. hikes, the central bank was in the news conference The Fed with Yellen at the minutes of the closed-door
The committee ended up putting at risk the credibility that would follow the an- helm followed those moves meetings which summarize
splitting the difference by of its stated goal of achiev- nouncement she intended with three rate hikes in 2017. the discussions.
saying that it planned to ing 2% inflation. to tell reporters, if asked, The Powell-led Fed raised The actual transcript of
be "patient'' with its start to Fed Vice Chairman Stanley that "patient" meant that rates another four times what is said at the meet-
rate hikes. Fischer, in an effort to light- the central bank would not in 2018 before reversing ings is not released until five
But to guard against a mar- en the mood, quoted from start raising rates until after course as the U.S. and years have passed.q

Report: U.S., China reach agreement to resume economic talks

WASHINGTON (AP) — The sues involving Chinese
United States and China policies that the Trump ad-
have agreed to resume ministration contends are
semiannual talks on eco- unfair trade practices but
nomic and trade issues, ac- were not resolved in the
cording to a published re- Phase One negotiations.q
port. These discussions had
been conducted in previ- Casa del Mar 2BR/2B
ous administrations but had Week 1/unit 1408 (15k);
been halted by the Trump Week 2/1113 ($16k);
administration. Weeks 5&6/1315 ($18k/Wk.);
The Wall Street Journal re- 5&6/1521 ($20k/Wk.);
ported Saturday that the In this Sept. 16, 2018, file photo, American flags are displayed Week 7/1308; 7&8/1408
resumption of the talks, together with Chinese flags on top of a trishaw in Beijing. ($18k/Wk.);
which were started in the Associated Press Week 8/1113; 8/1409
George W. Bush adminis- Trump administration signs the new talks would be ($17k/Wk.);
tration and continued in a Phase One trade agree- separate from negotiations Weeks 9-15 also available!
the Obama administration, ment with China in Wash- over a Phase Two trade CdMowner@gmail.com
was set to be announced ington. deal, which will cover a u.S. (860)992-3890
on Wednesday when the The newspaper said that number of contentious is- ________________________________212287