“We got a little hyper-excited,’’ Blinder, who is now a professor at Princeton University, said.
It’s not so apparent that the Fed overdid it this time. Its 0.25 point December hike lifted rates just barely into neutral territory, where monetary policy neither spurs not restricts growth.
While Blinder said a rate cut is possible, he reckons that the Fed’s next move is more likely to be an increase. For now though, “I’m perfectly fine with their patient stance.”
So too is Janet Yellen, who also argued for a rate pullback a quarter century ago when she was a Fed governor.
“It seems to me that monetary policy is well positioned,’’ the former Fed chair said at an April 10 event in Houston.
Peterson’s Stockton thinks the central bank eventually will trim rates.
“They’ll take out some insurance” at some point, he said. Just as in 1995-96, “the risks to doing that are relatively low.”
This article was provided by Bloomberg News.