As our day job consists of parsing thru every single word any central banker utters, two of the three key members of the Fed have spoken within the last 12 hours, Yellen and Dudley, both ardent defenders of cheap money. Yellen last night gave no hint of what happens next (gold lower reflective of this) and covered all her bases as while she defended her stance on being “highly accommodative” and said “further easing actions could be warranted if the recovery proceeds at a slower than expected pace,” she followed by saying “while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming than the FOMC currently anticipates.” Dudley this morning said “the incoming data on the US economy has been a bit more upbeat of late, suggesting that the recovery may be getting better established” with a caveat that we’re still not out of the woods “as underlined by the March labor market release.” Both remain very sanguine on inflation which gives them their own perceived intellectual cover to continue such extraordinarily easy policy to focus on their attempt and Congressional mandate of maximizing employment.
Further comments from Fed Vice Chair Dudley in his Q&A, BN: *DUDLEY HOLDS TO VIEW RATES SHOULD STAY LOW THROUGH 2014 *DUDLEY SAYS DOING ANOTHER ROUND OF ASSET PURCHASES `NOT FREE’ *DUDLEY: MORE ASSET PURCHASES WOULD PROMPT INFLATION `ANXIETY.’ On the fiscal impact of higher rates, *DUDLEY: `TOO BAD’ IF EVENTUAL RATE RISE CAUSES `FISCAL ISSUES’ *DUDLEY: HIGHER RATES WOULD SIGNIFICANTLY RAISE U.S. DEBT COSTS *DUDLEY: FED TO DO WHAT’S NEEDED ON RATES TO MEET DUAL MANDATE.
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