Two of the US Federal Reserve's most outspoken policy hawks on Friday pushed back on the view the US central bank missed the boat in the fight against high inflation, citing a tightening of financial conditions that started well before the Fed began raising interest rates in March.
"How far behind the curve could we have possibly been in terms of time if, using forward guidance, one views rate hikes effectively beginning in September 2021?" Fed governor Christopher Waller said, noting yields on the two-year Treasury note rose last autumn as the Fed began to signal the end of its super-easy policy.
The move reflected the equivalent of two Fed rate hikes through December, he said.
Speaking at the same Stanford University conference, titled "How monetary policy got behind the curve“, St Louis Fed president James Bullard argued the Fed is "not as far behind the curve as you might have thought".
Earlier this week the Fed raised its policy rate to a range of 0.75 per cent to 1 per cent. Critics say that is far too low to fight inflation running at three times the Fed's 2 per cent target.
Mr Bullard said he agrees, calling inflation "far too high", and called for rates to rise "expeditiously“, to perhaps 3.6 per cent, to bring inflation under control. But he noted markets are already pricing much of that increase in.
Traders of rate futures are currently pricing in a Fed funds rate of 3 per cent to 3.25 per cent by year-end.
"It's going in the right direction ... hopefully we'll be able to get away from this behind-the-curve characterisation soon," Mr Bullard said.
The two were among the first Fed policy makers last year to call for a rapid removal of easy monetary policy and a quicker start to raising interest rates.
Mr Bullard, in fact, dissented on the Fed's March quarter-point rate hike as too little.
But both joined their colleagues in approving the half-point rate hike delivered this week. Fed chairman Jerome Powell, speaking after the rate decision was announced, signalled further increases ahead, including half-point rate hikes in both June and July.
Mr Waller used his talk on Friday to trace how economic data first seemed to ratify, then challenge, his own view from last spring: that inflation would prove transitory as supply chains healed and one-time fiscal stimulus faded, and that the labour market was primed to roar back as Covid-19 receded.
Most of his colleagues shared in the first view; opinions were more divided on the second. In the end, Mr Waller said, inflation proved to be much higher and more persistent than he had thought.
At the same time he described the "punch in the gut" he felt as two weaker-than-expected monthly jobs reports in August and September seemed to undercut the thesis of labour market healing.
As it turned out, later data revisions showed the US labour market had been stronger than the real-time data suggested.
"If we knew then what we know now, I believe the [Fed] would have accelerated tapering and raised rates sooner," Mr Waller said. "But no one knew, and that’s the nature of making monetary policy in real time."
By early November, most policymakers had come around to the view that high and rising inflation would not drop quickly enough on its own, and business demand for workers was far outpacing a slow-to-recover labor market supply.
"It was at this point ... that the FOMC pivoted," Mr Waller said. The Federal Open Market Committee is the Fed's policy-setting body.
The conference featured several former Fed policymakers and economists who argued that the Fed had fallen so far behind the curve that it would almost surely end up causing a recession as it sought to catch up by raising rates faster.
Former Fed vice chairman of supervision Randal Quarles, who says he was the Fed's most hawkish member until Waller joined late last year, told the conference that in hindsight it's clear "it would have been better to start raising rates last September".
It wasn't a failure of nerve, or politics, or stupidity, he said on Friday. "It was a complicated situation with little precedent, and people make mistakes."
Racecard
6pm: The Pointe - Conditions (TB) Dh82,500 (Turf) 1,400m
6.35pm: Palm West Beach - Maiden (TB) Dh82,500 (T) 1,800m
7.10pm: The View at the Palm - Handicap (TB) Dh85,000 (Dirt) 1,400m
7.45pm: Nakeel Graduate Stakes - Conditions (TB) Dh100,000 (T) 1,600m
8.20pm: Club Vista Mare - Handicap (TB) Dh95,000 (D) 1,900m
8.55pm: The Palm Fountain - Handicap (TB) Dh95,000 (D) 1,200m
9.30pm: The Palm Tower - Handicap (TB) Dh87,500 (T) 1,600m
The Lowdown
Kesari
Rating: 2.5/5 stars
Produced by: Dharma Productions, Azure Entertainment
Directed by: Anubhav Singh
Cast: Akshay Kumar, Parineeti Chopra
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
UAE squad
Ali Kashief, Salem Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdelrahman, Mohammed Al Attas (Al Jazira), Mohmmed Al Shamsi, Hamdan Al Kamali, Mohammad Barghash, Khalil Al Hammadi (Al Wahda), Khalid Eisa, Mohammed Shakir, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Adel Al Hosani, Al Hassan Saleh, Majid Suroor (Sharjah), Waleed Abbas, Ismail Al Hammadi, Ahmed Khalil (Shabab Al Ahli Dubai) Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Mahrami (Baniyas)
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
If you go
The flights
Emirates flies from Dubai to Seattle from Dh5,555 return, including taxes.
The car
Hertz offers compact car rental from about $300 (Dh1,100) per week, including taxes. Emirates Skywards members can earn points on their car hire through Hertz.
The national park
Entry to Mount Rainier National Park costs $30 for one vehicle and passengers for up to seven days. Accommodation can be booked through mtrainierguestservices.com. Prices vary according to season. Rooms at the Holiday Inn Yakima cost from $125 per night, excluding breakfast.
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Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
RESULT
Esperance de Tunis 1 Guadalajara 1
(Esperance won 6-5 on penalties)
Esperance: Belaili 38’
Guadalajara: Sandoval 5’
The biog
Born: near Sialkot, Pakistan, 1981
Profession: Driver
Family: wife, son (11), daughter (8)
Favourite drink: chai karak
Favourite place in Dubai: The neighbourhood of Khawaneej. “When I see the old houses over there, near the date palms, I can be reminded of my old times. If I don’t go down I cannot recall my old times.”
APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
Need to know
The flights: Flydubai flies from Dubai to Kilimanjaro airport via Dar es Salaam from Dh1,619 return including taxes. The trip takes 8 hours.
The trek: Make sure that whatever tour company you select to climb Kilimanjaro, that it is a reputable one. The way to climb successfully would be with experienced guides and porters, from a company committed to quality, safety and an ethical approach to the mountain and its staff. Sonia Nazareth booked a VIP package through Safari Africa. The tour works out to $4,775 (Dh17,538) per person, based on a 4-person booking scheme, for 9 nights on the mountain (including one night before and after the trek at Arusha). The price includes all meals, a head guide, an assistant guide for every 2 trekkers, porters to carry the luggage, a cook and kitchen staff, a dining and mess tent, a sleeping tent set up for 2 persons, a chemical toilet and park entrance fees. The tiny ration of heated water provided for our bath in our makeshift private bathroom stall was the greatest luxury. A standard package, also based on a 4-person booking, works out to $3,050 (Dh11,202) per person.
When to go: You can climb Kili at any time of year, but the best months to ascend are January-February and September-October. Also good are July and August, if you’re tolerant of the colder weather that winter brings.
Do not underestimate the importance of kit. Even if you’re travelling at a relatively pleasant time, be geared up for the cold and the rain.
At Everton Appearances: 77; Goals: 17
At Manchester United Appearances: 559; Goals: 253
