We live in a world of once-unthinkable monetary policy experimentation. Central bankers have thrust benchmark interest rates below zero, gobbled up trillions of dollars in assets on the open market – and now, thanks to the youngest member of the Federal Reserve's rate-setting committee, transmitted policy decisions via a blogging service heretofore used chiefly for tech-CEO mea culpas and self-important “why I left New York” essays.
We knew Neel Kashkari would prove an unconventional addition to the Federal Open Market Committee as soon the rocket-scientist/Goldmanite/gubernatorial-candidate/TARP-master's appointment to the Minneapolis Fed was announced last year. He hasn't let us down. His first day on the job was devoted to a positively Bernie-like assault on too-big-to-fail. He ended up the lone dissenter at this week's FOMC meeting, his second, opting to hold when everyone else voted to hike. Now we've got a moody Medium essay.
It's actually his second. Again following Medium orthodoxy of titling essays “Why I ____,” Kashkari lays out his reasons for dissenting, which will sound familiar to anyone who's listened to the Fed's doves in recent years. As he explains up top:
At the February 1 meeting of the Federal Open Market Committee, I voted with all of my colleagues to keep rates steady. Today I publish an update to that initial essay, using the same framework to explain why I again voted to keep rates steady at the FOMC meeting earlier this week. What is different now is that the rest of the FOMC voted in favor of an increase. I was alone in my dissent. I am not planning to publish an update after every meeting, but given that I reached a different conclusion than my colleagues, I thought it appropriate to provide an explanation.
The essay reads largely as a rehash of his previous one. Briefly punctuating the wonky prose with the OK-so grammatical construction so prevalent among millennial essayists, he summarizes:
OK, so we are still coming up somewhat short on our inflation mandate, and we may not have yet reached maximum employment.
It's not all wonk, though. There's also a bit of what in the relatively bloodless monotony of Fed-speak might constitute juicy sniping at his colleagues:
While the FOMC wants to avoid making forecast errors whenever possible, to the extent that we make them, I would think we’d want our errors to be equally too high and too low. Yet, over the past five years, 100 percent of the medium-term inflation forecasts (midpoints) in the FOMC’s Summary of Economic Projections have been too high: We keep predicting that inflation is around the corner. How can one explain the FOMC repeatedly making these one-sided errors? One-sided errors are indeed rational if the consequences are asymmetric. For example, if you are driving down the highway alongside a cliff, you will err by steering away from the cliff, because even one error in the other direction will cause you to fly over the cliff. In a monetary policy context, I believe the FOMC is doing the same thing: Based on our actions rather than our words, we are treating 2 percent as a ceiling rather than a target.
He goes on:
I am opposed to stating we have a target but then behaving as though it were a ceiling.
We're not going to pretend this thing makes for riveting reading, exactly. There are no lurid details from the FOMC meeting or personal asides. But in the broader context of Fed communications, it's kind of extraordinary that a voting member of the rate-setting committee of the most important central bank in the world is issuing policy guidance on an amateur personal blogging platform.