The Fed will wait to see at least another month's worth of economic data before it makes a decision to ease. They want to see whether or not weak July data were more of an aberration or a trend -- two months will give them more cover to ease further.
More Quotes from Diane Swonk:
There's no question that, given the right circumstances, the Fed wouldn't hesitate to spend 175 basis points. But they really have to have a good reason to put an insurance policy out there.Diane Swonk
The question is not whether the consumer is slowing. From the Fed's perspective, it's whether the consumer is slowing down fast enough to keep inflation in check,
Diane Swonk
What can the Fed do about WorldCom This is not an interest rate problem. This is not something they should be involved with, ... I'm sorry, Wall Street, but you can't look to the Fed to save you when they don't have the tools to save you on this one.
Diane Swonk
obviously something that (the Fed) is trying to stretch for, saying, 'Well maybe people aren't trading job security for wages anymore.'
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He'd like to bring in inflation targeting. (But) he must build consensus to do so and he doesn't have consensus now. I think he's going to make a smooth transition, but it's going to be an evolution in policy change.
Diane Swonk
There are many who, on a theoretical basis, would argue that now is the time the Fed should begin pulling back because we'll be feeling the bulk of the rate cuts when we already should have started tightening again.
Diane Swonk
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