USA TODAY International Edition
These 10 folks have the future of interest rates in their hands
Markets have been volatile recently as investors sought clues on whether the Federal Reserve will raise interest rates for the first time this year at a two- day meeting that begins Wednesday.
The intense speculation is rooted in the economy’s mixed messages of late. On the one hand, job growth has picked up after a spring lull, stoking the belief that the Fed should lift rates to temper an eventual run- up in inflation. At the same time, August brought slowing payroll gains and a sharp pullback in service- sector growth.
The consensus among economists and futures markets is that a cautious Fed will hold off until December,
but the Sept. 20- 21 meeting is at least packing a bit more drama than others this year. Here’s a rundown of the Federal Open Market Committee’s voting members and whether they’re known as doves, who are typically inclined to keep rates low to spur growth, or hawks, who are generally more eager to raise rates to head off inflation. JANET YELLEN, CHAIR ( DOVE) Former San Francisco Fed chief, Berkeley professor and Fed board veteran was the first Fed policymaker to foresee the potentially devastating impact of the housing crisis in mid- 2007. In late August, said the case for a rate hike “has strengthened in recent months” but didn’t signal timing. STANLEY FISCHER, VICE CHAIRMAN ( CENTRIST) Former governor of the Bank of Israel was among the first central bankers to cut interest rates during the 2008 financial crisis and the first to raise them as the economy and financial system began to stabilize. Last month, said the U. S. labor market “is very close to full employment,” fueling rate- hike speculation. WILLIAM DUDLEY, NEW YORK FED PRESIDENT ( DOVE) Former partner, managing director and chief economist at Goldman Sachs took office in January 2009. Said in July that markets appeared “too complacent” about the prospect of rate increases and the Fed would need to move faster as inflation heats up. JEROME POWELL, GOVERNOR ( CENTRIST) Princeton graduate was assistant secretary and undersecretary of the Treasury under President George H. W. Bush. Citing global risks, he told the Financial Times last month he favored a “very gradual” path for rate increases. DANIEL TARULLO, GOVERNOR ( DOVE) Former Georgetown law professor served as deputy assistant for economic policy, among other titles, under President Bill Clinton. Told CNBC this month he wanted to see “more tangible evidence of inflation” before bumping up rates. LAEL BRAINARD, GOVERNOR ( DOVE) Served as undersecretary of the Treasury for International Affairs for President Obama. Last week, she said subdued economic growth “counsels prudence” as the Fed considers rate increases, adding, “this approach has served us well in recent months.” Low inflation, she said, has made the case for a move “less compelling.” JAMES BULLARD, PRESIDENT OF ST. LOUIS FED ( HAWK) Minnesota native graduated from St. Cloud State University with a degree in economics, and quantitative methods and information systems. Pointing to persistently low growth and inflation, he said interest rates “would likely remain essentially flat” over the next few years. ERIC ROSENGREN, PRESIDENT OF BOSTON FED ( DOVE) Boston Fed veteran joined the bank in 1985 as an economist in the research department. Said last week “a reasonable case” can be made for pursuing gradual rate hikes, adding a failure to do so “could shorten, rather than lengthen” the recovery. LORETTA MESTER, PRESIDENT OF CLEVELAND FED ( HAWK) Former research director at the Philadelphia Fed is an adjunct professor of finance at the Wharton School of the University of Pennsylvania. Said in July she saw “little costs in waiting to take the next step” and at the June meeting said waiting too long could cause the public to view the Fed’s policy tools “as ultimately ineffective.” ESTHER GEORGE, PRESIDENT OF KANSAS CITY FED ( HAWK) Joined the bank in 1982 as an examiner and served for 10 years as chief regulator. Three times this year she was the sole dissenter to Fed’s decision to stand pat on rates. Said in the spring that keeping rates low too long could lead to eventual rapid hikes to ward off inflation. “Historically, rapid increases in interest rates end poorly, resulting in economic recessions,” she said.