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Monetary Policy (FOMC Participants (Dallas: Robert Kaplan: (https://www…

- - - - Says that what would cause him to revise his estimates are productivity growth
      - Talks about some of the models he looks at: 1. Laubach/Williams, 2. Evan Koenig Model
      - Says that to get to neutral "it'll take probably three rate increases from here which will get us in the range 2 3/4 to 3 percent."
      - Interestingly he also says that if Demand remains strong the labor market is not able to meet that Demand he would watch net exports and see if they rise
      - Says that wages are held down by the pricing power problems companies have. This is because consumers have more computing power today and as the argument goes can always fish around for more competitive prices. To combat this many CEOs begin talking about replacing workers with tech
  - - - Fiscal Policy is serving as a tailwind to the US Economy. Expects 3 Percent Change in GDP this year and 2.5 percent change in 2019
      - Labor Market stands at 3.7 Percent and he sees it moving down to slightly below 3.5 percent the following year
      - Expects price inflation to move slightly above two percent. Seems to be a little dovish on this front and explains that this is likely a good thing given the slow recovery and long bouts of below target inflation
      - Claims that the Fed is "nearing the end of the process of normalizing and are inching closer to conducting normal monetary policy."
      - Says that as we approach normal we should not concern ourselves as much with r*. It is a range and the closer one gets to that range the fuzzier it is.
      - Highlights the two options for policy framework, go big or go scarce on reserves. Will communicate when the final decision is made
  - - - Talks about how the monetary policy framework is returning to normal but cannot be quite the same as the operating framework of yesterday . Particularly, when the Fed hits the ELB, forward guidance, large scale asset purchases, and staying low for longer are all tools the Fed needs at its disposal. In turn tolerating inflation above the 2.0 percent target is a necessary condition for keeping rate so low for so long.
      - Makes the claim that "most FOMC participants see the long-run neutral fed funds rate—that is, where the rate should settle at when policy is neither expansionary nor contractionary—somewhere in the range of 2-3/4 to 3 percent."