I have work to do – running some regressions on Chinese migration data – but I can’t resist the temptation to read the always interesting blog of Scott Sumner. He admits that he is depressed by the rantings of supposed monetary experts like Bernanke, but can’t help but write about it, just as the rest of us cannot help but read about it, I suppose. Anyway, this passage caught my eye:
Here’s what [Fed Chairman Ben] Bernanke says about the prospects for reaching their [the Federal Reserve's] goals:
The unemployment rate is expected to decline to between 7 and 7-1/2 percent by the end of 2012. Most participants viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside. Most participants projected that inflation will average only about 1 percent in 2010 and that it will remain low during 2011 and 2012, with the risks to the inflation outlook roughly balanced.
Bernanke’s lucky that Congress doesn’t have a clue as to how to interpret Fed-speak, because he is basically saying the following:
1. The Fed has reduced its implicit inflation target below 2%, indeed below even 1.5%.
2. The Fed sees more downside risk on jobs, but puts a zero weight on jobs in its policy deliberations.
Scott Sumner. “No We Can’t”, The Money Illusion, 21 July 2010.
