PIMCO Chief Economist on Fed Decision

The transcript discusses the Federal Reserve's criteria for rate hikes, focusing on maximum employment and inflation. It explores potential tapering announcements and their impact on the market, considering both acceleration and deceleration scenarios. The role of fiscal policy in shaping monetary policy is examined, with a focus on its marginal impact on growth. Consumer behavior, particularly savings, is analyzed for its influence on interest rates. Finally, the economic outlook is considered, with expectations for payroll growth and the impact of the Delta variant on service spending.

What are the three criteria mentioned for a rate hike?

• Maximum employment, 2% inflation, and GDP growth

• Maximum employment, 2% inflation, and PCE measure

• Maximum employment, 2% inflation, and tapering

• Maximum employment, 2% inflation, and fiscal policy

What could potentially accelerate the tapering process?

• Stronger than expected economic conditions

• Stable economic conditions

• Weaker than expected economic conditions

• Decreasing inflation rates

How might the market react to an unexpected change in tapering?

• It would likely be indifferent

• It would likely be confused

• It would likely be surprised

• It would likely be pleased

How does the Federal Reserve incorporate fiscal policy into its forecasts?

• As an endogenous variable

• As an exogenous variable

• As a constant variable

• As a dependent variable

What is the expected impact of fiscal policy on growth next year?

• Significant impact

• Negative impact

• No impact

• Positive impact

What is a potential reason for consumers wanting to save more?

• Strong economic growth

• Low interest rates

• Recent large recession

• High inflation rates

What is the expected trend in payrolls according to the transcript?

• No change in payrolls

• Re-acceleration in payrolls

• Stagnation in payrolls

• Decrease in payrolls