Fed's George (non voter, hawk): Economy continues to grow steadily, drivers of the economy are improving, there has been a reduction in unemployment
- Could be some slow economic activity in Q1 as a result of inventory drawdown, and the Q4 inventory builds
- As the economy picks up, there will be wage gains and confidence to help spending
- some firms beginning to have trouble finding skilled and qualified workers
- expects to see increasing wage pressure in the US labor market; inflation will gradually firm and move towards 2% target
- forecasts 2.5% GDP this year, 3% in coming years
- supportive of the Fed tapering QE
- there are concerns over leaving rates too low for too long, prompts investors to take more risks, yield spreads are showing investors are taking risks
- Consumer credit growth is accelerating, highlights the least credit worthy households are taking on increasing levels of debt
- Confirms is looking at the reverse repo as a policy tool
- Affirms first Fed meeting with Yellen shows continuity from Bernanke
- have no firm date or path for future Fed interest rate moves
- Fed will have to keep a close eye on how the economy does when it starts withdrawing stimulus; Fed will have to be careful in how it winds down accommodation.
- Ukraine crisis only provides a small risk to US trade