Ethan Harris Fed Quotations

We needed 20 percent economic growth in the third quarter to get rid of all of the excess capacity in the economy. The Fed is still going to be concerned about disinflation.

We've gone from a period where there was a reasonable chance the Fed might cut rates just four months ago to one in which the Fed is very much comfortably just sitting on hold for now.

If the Fed isn't happy, the market isn't happy.

There is a history both in appointments under the Bush administration and the Fed chairmanship itself of people off the list being picked. Bush does seem to have a proclivity to pick people with a more business background for his economic positions.

I think what people will see is that commentary from Fed officials will sound almost identical to their commentary prior to this meeting. Nothing's really changed at the Fed.

We now believe that the first Fed rate hike will not come until December, and we continue to worry the Fed may be forced to ease again before it begins hiking rates,

What we're assuming is that as the Fed hikes rates, the bond market gets pulled along.

With few signs that consumer prices are about to break to the upside ... along with signs that aggregate demand remains robust, we expect the Fed will not only vote to keep rates constant, but will leave the growth and inflation bias statements unchanged.

While the Fed is more than one person, Mr. Greenspan's retirement means less confidence in the Fed, with somewhat greater risk of both financial market instability and inflation.

We see a number of reasons for the Fed to drop its 'measured pace' language.

Fed officials ... likely anticipated some fallout in fixed income markets, ... We believe ... that Fed officials wanted to signal a greater probability of tightening in 2004 than had been priced into markets.

You probably want to subtract about two-tenths of a percent from first-quarter GDP growth. But that's looking like very old history, with the Fed having eased twice since the first quarter. From the market's perspective, you feel like you're in a different world already. The first quarter looks very distant, indeed.

At the national level, the Fed has to worry about the inflation implications of the storm.

The Fed is going to have a bias to be very easy in terms of policy, not just in the next couple of months, but well into the future.

The Fed is going to take a cautious approach (because) they're worried about how the consumer will handle higher interest rates, ... We've had recovery nurtured on super-low interest rates. They don't want to shock the patient by withdrawing the medicine too quickly.

The Fed is saying that 'we're being tested here, we're being tested on our anti-inflation credibility,' ... They need to sound tough. They need a pretty good bark to go with their bite.

The Fed has made it clear that it will take quite ugly news to get them to move in advance of any clarity around the Iraq situation. That means the March 18 meeting seems too early to expect a cut.

In total, we learned very little about the future of the economy or Fed policy except that the Fed is not ready to hike rates in the very near future.

Clearly the new focus of Fed attention is the stock market, ... The Fed is not focused on many of the indicators equity analysts emphasize. Instead, the Fed's focus is on aggregate wealth creation in the market.

Clearly the new focus of Fed attention is the stock market. The Fed is not focused on many of the indicators equity analysts emphasize. Instead, the Fed's focus is on aggregate wealth creation in the market.

The combination of still-strong growth and rising inflation has prompted a string of hawkish Fed speakers all arguing strenuously for the need to keep inflation contained,

Even with this dip, the unemployment rate is still about a percentage point above the level where it might threaten inflation. That means there's plenty of wiggle room for the Fed on policy. They're going to be patient and not change the wording of their statement next week.

It's much too early for the Fed to be thinking about hiking interest rates. It would be a very dangerous action on their part in this fragile initial stage of the recovery.

With inflation trending up, we believe the Fed will want to stay on the tight side of neutral for an extended period.

I don't think this should alter anybody's views about the Fed in a major way.

For the Fed to hike rates now would be the equivalent of a doctor prematurely declaring a patient at full health, discharging them from the hospital and then forcing them to run a mile.

The markets are going to be a bit uncertain as to how to react, given that the Fed is waiting in the wings. They are all going to be looking ahead toward the FOMC meeting to see what the Fed's verdict is on the data rather than reacting as it comes out. They'll be sort of holding their breath.