US Fed projected three rate hikes this year with three new regional presidents set to vote. Here are Fed Hawks and Doves 2017. Who is prevailing?
12 January, AtoZForex – The US Federal Reserve (Fed) raised rates in December forecasting three more hikes in 2017. Given these projections and uncertainty related to Trump’s upcoming presidency, let’s take a look at the stance of Fed officials. Who is hawkish and who is dovish?
According to Sean Callow, Research Analyst at Westpac, the Board of Governors has been usually unified over the approach to the policy. While for Fed presidents who tend to be rather hawkish it is common to dissent. This year three new regional Fed presidents are set to vote for the first time. They are Neel Kashkari of Minneapolis, Robert Kaplan of Dallas, and Patrick Harker of Philadelphia. Also, Charles Evans Chicago Fed president will rotate into a voting role.
Fed Hawks and Doves 2017: Board of Governors
Washington DC-based Board of Governors is composed of 7 members who always vote. At the moment, they are Janet L. Yellen, Lael Brainard, Stanley Fischer, Jerome H. Powell, and Daniel K. Tarullo. With two places being vacant.
Dove- Hawk Index 2016. Source: CNBC
Janet Yellen, Chair. Her tenure ends on the 3rd of February 2018. Donald Trump commented that Janet Yellen should be "ashamed" of what she’s doing to the US economy. Yet, it now appears that she would serve out her term before being replaced by a hawk.
Stanley Fischer, Vice Chairman of Board of Governors. He seems to be more hawkish than Janet Yellen and other Board members.
Jerome Powell, Board of Governors. Jerome Powell has recently argued against relying heavily on "Taylor rule variations". Jon Taylor is one of the candidates Donald Trump suggested to succeed Yellen. Jerome Powell is less hawkish than Stanley Fisher.
Lael Brainard, Board of Governors. Lael Brainard served as an adviser to President Bill Clinton. She had been suggested as Treasury secretary in case Hillary Clinton had won the elections. Lael Brainard is dovish in respect to rate hikes.
Daniel Tarullo, Board of Governors. He is mainly focused on financial regulation. In July, Daniel Tarullo stated he wanted "more convincing" evidence that inflation is moving towards 2%. Mr. Tarullo is rather dovish.
Furthermore, two places are vacant. The Senate needs to confirm proposed candidates. Taking into consideration that Republicans are in both the Senate and White house, hawks are likely to be selected.
Bill Dudley is the Vice Chairman of Federal Open Market Committee (FOMC) and New York Fed president. Like the Board of Governors, he always votes. In regards to his position, he has a dovish stance.
Regional presidents to vote in 2017
This year, there are three Fed presidents who will be voting for the first time. Therefore, it is quite uncertain yet who are Fed hawks and doves 2017.
Dove- Hawk Index 2017. Source: CNBC
Centrist/Hawks: Robert Kaplan Dallas Fed president appears to be less hawkish compared to his predecessor Richard Fisher. However, he has seemed to be impatient to increase rates over a recent period of time.
Patrick Harker Philadelphia Fed president looks to be quite hawkish. In November 2016, he said he was supportive of a rate rise in September, November and in December. In addition, Mr. Harker alerted that "when inflation starts to rise, it tends to rise quickly".
Centrist: Neel Kashkari is the former Treasury official. In 2016, he started to serve as the Fed president of Minneapolis. The Minneapolis Fed historically incline towards a hawkish stance. Yet, Neel Kashkari said that the Fed should be willing to tolerate 2.5% inflation.
Dove: Charles Evans who is Chicago's Fed President is dovish. He has commented that the growth outlook was positive and that the Fed was reaching its 2% inflation target. In November, Charles Evans suggested a funds rate of 1.0-1.25% by the end of 2017.
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