Another Fed Confessional

In reference to statements made by Fed officials that the decline in the price of oil was good for the economy, San Francisco Fed president John Williams now admits “We Got It Wrong“. 

Click on the link for a video submitted by Zero Hedge on January 10.

On January 9, Forex Live provided some quotes …

The Fed’s Williams was asked about the impact of oil on the US economy. “The Fed got it wrong when it predicted a drop in oil prices would be a big boon for the economy,” he said. “It turned out the world had changed; the US has a lot of jobs connected to the oil industry.”

More accurately, Williams said “We got this wrong“. The above statements attributed to Williams are not quotes but they are a close paraphrase. I spent quite a while looking for “Fed got it wrong” before finding the above video.

Forex Live also stated “At this time last year the Fed’s Bullard was saying: The ‘oil price drop is very unambiguously positive for US.'”

In Search of Bullard

I searched high and low but could find no such statement by Bullard.

Purportedly that statement comes from a Bloomberg TV interview on January 30, 2015: Bullard Says Rates at Zero Not Right for U.S. Economy.

I played the interview. Bullard made no such statement then, or at any other time, at least that I can find.

Instead, you will find a mess of total nonsense about inflation expectations as well as some statements that are far more reasonable. Bullard did state normal interest rates are close to 4%.

The video conclusion was interesting.

Bloomberg: How confident are you in your forecasts given all the cross-currents out there?

Bullard: Very confident. (laughing). I think forecasting is always a hazardous thing. I think one of the things is you always have to keep in mind is, no matter who you are, you put out a forecast and you know you’re gonna be wrong, because that’s the way the macro economy works. And you have to learn, which direction were we wrong, and how should we shade our forecast next time to try to accommodate that. And that’s the best you can do because it’s a wild bucking bronco to try to forecast the US economy.