You really can’t make this stuff up:
- EVANS: FED NEEDS TO BE CLEAR RATES WILL BE LOW FOR LONG TIME (ok)
- EVANS SAYS ‘WE NEED TO LET THE MARKET WORK’ (umm, well…)
- EVANS SAYS FED WANTS TO SEE LOWER LONG-TERM INTEREST RATES (but… you just said)
- EVANS:HIGHER LONG-TERM RATES FOR RIGHT REASON IN ‘OUR’ INTEREST (wait, what?)
Did Charlie blow a fuse? Because he just said that the Fed will hold rates low, wants long-term rates low, but also wants to let the markets work, and wants inflation to raise long-term rates… Forward-guidance just lost another few points of credibility.
Some questions here:
- Who is “our“?
- If higher rates are in our interest, then why is the Fed holding rates low and “wanting see long-term rates low”?
- If we need to let the market work then why is the Fed still buying well over 100% of MBS issuance and virtually all TSY long duration issuance as well as supporting equity valuations?