Fed Signals Interest Rates to Stay Near Zero Through ​2023

The WSJ reports Fed Signals Interest Rates to Stay Near Zero Through ​2023

Yep, and not a soul is surprised. 

The Wall Street Journal's Statement Tracker shows changes changes since the last meeting.

Statement Tracker Changes

Statement Tracker Chjanges 2020-09-16

Dissents

  • Robert S. Kaplan believes it is "appropriate to maintain the current target range until the Committee is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals as articulated in its new policy strategy statement, but prefers that the Committee retain greater policy rate flexibility beyond that point"
  • Neel Kashkari wants "the Committee to indicate that it expects to maintain the current target range until core inflation has reached 2 percent on a sustained basis".

Commitment to Bubbles

The Fed commits to holding inflation above 2% for some time to make up for errors in the other direction.

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This too was expected but it's rather like smashing your right hand with a hammer because you did not smash your left hand hard enough.

Why 2% and not 1% or 4%.

The Fed has never explained. Besides there is no net benefit to inflation but there are winners and losers.

The winners are those with first access to money, the banks and the wealthy. The losers are everyone else. 

This implies the target should be 0%, assuming there should be a target at all.

But there shouldn't be a target because there shouldn't be a Fed. 

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