The Federal Reserve monetary policy tightening program just got underway late last year, and already an interest rate lift-off that would raise borrowing costs faces a barrage of economic and confidence headwinds. So strong are the mixed signals, and the flare up of negatives, that many think the Fed may need to pause, or even 180 on its plan for higher rates.
New York Times columnist Binyamin Appelbaum's analysis paints a picture of a Fed board and economics observer panel sharply divided over what the foundational reading on the economy should be, and what to do next. Some Fed board members focus specifically on jobs growth rates, which have weakened, while others look at unemployment and labor force participation and see a need to curb imminent wage inflation. Appelbaum writes:
William C. Dudley, president of the Federal Reserve Bank of New York and a close adviser to Ms. Yellen, said in an interview with Market News International this week that he was worried about the economic impact of jittery markets.
“If those financial conditions were to remain in place by the time we get to the March meeting, we would have to take that into consideration in terms of that monetary policy decision,” Mr. Dudley said.