Today's Fed Speak
Today's Fed Comment from Gramlich: "It would be a bad mistake to try to target asset prices. The Fed has a basic mandate to stabilize prices and stabilize employment at a high level."
Translated: We think housing prices are stable and will not target the housing market.
"The Fed chairman has said there is no evidence of a bubble. AND there is no evidence that a small increase in interest rates would keep a bubble from developing or would limit one's size".
Translated: We disavow any knowledge of a bubble, and the consequences of our actions.
I would be very worried about the verbiage in these statements. My interpretation, taken collectively: the Fed thinks any increases they make will have no effects, as they believe prices are "normal". I.e. Any future revaluation of the asset should be attributable to other market forces and not be attributed to rate increases.
Translated: We think housing prices are stable and will not target the housing market.
"The Fed chairman has said there is no evidence of a bubble. AND there is no evidence that a small increase in interest rates would keep a bubble from developing or would limit one's size".
Translated: We disavow any knowledge of a bubble, and the consequences of our actions.
I would be very worried about the verbiage in these statements. My interpretation, taken collectively: the Fed thinks any increases they make will have no effects, as they believe prices are "normal". I.e. Any future revaluation of the asset should be attributable to other market forces and not be attributed to rate increases.
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