Lyle Gramley
Lyle Gramley
Lyle Elden Gramleywas an American economist. Involved in economic policymaking during the Carter and Reagan presidencies, he served on the Council of Economic Advisers from 1977 to 1980, and on the Federal Reserve Board of Governors from 1980 to 1985...
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What the Fed is trying to do, by being more transparent and more communicative, is highly desirable. But there are going to slips along the way. Ben will learn and the markets will learn.
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The apparent bubbling up of inflation we saw earlier in the year has quieted down again. Basically it's a picture of inflation staying reasonably tranquil. The Fed should like that.
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I can't interpret this report as a weak economy, and I don't think the Fed will either. They are going to persist in moving interest rates up until they see greater indications than what we have now that either the economy is weakening, or inflation is getting under control, or both.
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There are a lot of worries circulating around about deflation, ... What the Fed is doing is saying we don't need to worry. If deflation happens, they will counter aggressively, and they have the tools to do so.
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This time, we're starting with an inflation rate that's too low and heading lower, ... What that means is the Fed will sit still until such time as it sees inflation start turning up -- which might not happen until late 2004 or early 2005.
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Then the Fed would be in a very tough spot,
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Anyone who sits at that table knows that if the Fed puts his head up in the midst of an election campaign when it's not necessary to do so, that would be a rather foolish thing to do. You don't want people shooting at you unnecessarily - you'd rather live to fight another day.
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I think the Fed opened the door for a half-percentage-point increase in August, if it's needed,
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I think the Fed needs to worry about the possibility it's flirting with deflation if it lets this go too far. When nominal rates get down toward zero, the Fed starts running out of ammunition.
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My own preference would be for the Fed to state explicitly what it's aiming at, ... That would be helpful in quieting the bond market. But I don't think it's going to happen.
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Being Fed chairman only increases his value that much more.
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The Fed is looking at an economy right now that is growing strongly with upside risks to inflation.
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The Fed will be content to sit on the sidelines to await more definitive evidence as to whether inflation is going to be a problem or not, ... Setting the election aside entirely, the Fed, looking at the incoming data, would say to itself 'right now we don't want to raise interest rates and we don't need to raise interest rates.'
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Not only is he as mentally acute as the average 77-year-old, he's as acute as the average 27-year-old. He has a phenomenal mind and very good judgment, ... People close to the decision-making at the Fed are almost unanimously in great praise of him, as I would be. I think it's a wonderful thing for the Fed and for the country that he's being kept on.