It sounds a little like regret. It also leans in the direction of confirming that policymakers know they’ve messed up, big time. This has become the established pattern, for good reason. What they don’t know, to our collective downfall, is what to do about it. They’ve decided just to pretend while in office it didn’t happen the way it actually did.
Once clear of the obligation, then they can go back and try to rehabilitate their reputations. History won’t be kind, and some of them sense what’s inevitable.
Janet Yellen is now talking. Former Federal Reserve officials have a peculiar way of not quite openness upon being released from their former positions (or just prior to their exit). She now says any central bank might want to consider letting its economy make up for lost ground. You might wonder given this admission what the hell she was doing for four years. After all, “rate hikes” started in her second year on the job.
Jump the gun, did they?
It’s a tacit admission of what has been really two problems rolled into one. The recovery has been incredibly less growth than any other. At the same time, the contraction preceding it was the largest in generations. Put those together and supposedly that has added up to an economic boom in 2018 that will force the Fed to act more aggressively (as if it could). Not even close.
Now that she’s out of office, Yellen’s thinking a bit differently about it – though she’s careful not to come out and say they failed. It’s more like maybe possibly the Fed failed to fully succeed. As Reuters puts it (thanks to M. Simmons):
But Yellen is urging them to go a step beyond, adopting some metric — whether a measure of lost output, the sum of below target inflation, or some other measure — that it would hit before raising rates too high, if at all.
If only there was some measure of lost output, to display with perfect clarity just how far behind we’ve all fallen economically. I’d hate to think the Federal Reserve (as well as its global cousins) has been less than completely successful all this time because it doesn’t have the capability to manipulate a spreadsheet.