Fed–Williams uber dovish

Looks to me like there’s been more push back on rates due to risks to housing, perceived to be the most rate sensitive ‘engine of growth’. I don’t think this Fed wants its legacy to be ‘just when things got going after 5 years of hard work the let rates go up and it all went bad again.’

The problem is that if markets believe these Fed tools do work to support higher rates of growth than otherwise, that means Fed rate hikes will actually be sooner/faster etc. which works to keep rates higher. So seems it’s a bit of a conundrum. The policy designed to keep term rates down can instead work to keep them higher.

And should the stock market ‘crater’, the Fed will likely look to ‘do more’ which could be anything from ‘more of same’- more QE, guidance, tolerances, etc- to outright rate caps, which are the only ‘reliable’ way to set lower term rates.

*FED’S WILLIAMS: AFTER FIRST RATE HIKE, ONLY GRADUAL INCREASES

*WILLIAMS SAYS UNEMPLOYMENT IS TOO HIGH, INFLATION TOO LOW

*FED’S WILLIAMS SEES UNCONVENTIONAL STIMULUS FOR NEXT FEW YEARS

*FED’S WILLIAMS: AFTER FIRST RATE HIKE, ONLY GRADUAL INCREASES

*WILLIAMS HAS SUPPORTED RECORD MONETARY POLICY STIMULUS

*WILLIAMS DOESN’T VOTE ON MONETARY POLICY THIS YEAR

*SAN FRANCISCO FED PRESIDENT JOHN WILLIAMS SPEAKS IN SAN DIEGO

*WILLIAMS SAYS UNEMPLOYMENT IS TOO HIGH, INFLATION TOO LOW

*FED’S WILLIAMS SEES UNCONVENTIONAL STIMULUS FOR NEXT FEW YEARS