Re: Does the Fed Think the Shutdown Didn’t Hurt the Economy?

by Noah Glyn

Pat, it should be noted that the FOMC did still include their pithy assessment of fiscal policy, “Fiscal policy is restraining growth,” a line the committee has repeated in every statement since March of this year.

That being said, the caveats you present to Mr. Ashworth’s analysis strike me as correct. My thoughts on the matter — and this is pure speculation — are that the FOMC wants to avoid antagonizing Republican senators, who it hopes will vote for Janet Yellen’s confirmation. It’s pretty clear the FOMC members, especially Ben Bernanke, want Yellen to get the job. Bernanke’s tenure as Fed chairman has been one of consensus-building, and Yellen seems to be cut from the same cloth. They are probably worried about future FOMCs being politically marginalized. It’s not too difficult to imagine certain Republican senators’ using the FOMC’s rushed analysis of the government shutdown and the debt-celing fight against Yellen in a confirmation battle.

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