A September Rate Hike Would Be Very Difficult, Hoenig Says

Summary

Former Kansas City Fed President Thomas Hoenig argues that a September rate hike would be very difficult due to its proximity to the November election, and that the Fed's frequent press conferences and forward guidance limit the committee's flexibility. He also discusses dissent culture and the chairman's desire for consensus inside the FOMC.

• Hoenig says press conferences should be held only every other meeting to avoid staleness and maintain productive exchange.
• He contends that forward guidance reduces the FOMC's options and ties members' hands before actual deliberation.
• A September rate hike is 'very difficult' because it is close to the election, and he sees an unspoken truth that the Fed will wait until after the election.
• The chairman wants to be on the winning side in every instance, and losing the majority would be significant in the Fed's consensus-driven culture.
• Dissent is acceptable as long as the chairman carries the majority, but the culture leans heavily toward consensus.