Doves And Hawks Of The Fed

A look at the economic calendar of the week shows that a host of Fed officials are scheduled to make public appearances this week. Fed speeches are market-moving economic events, given that they give clues to the monetary policy outlook.

On Monday, St. Louis Federal Reserve President James Bullard discussed the U.S. economy and monetary policy at the America's Cotton Marketing Cooperatives 2017 conference in Nashville.

The essence of Bullard's speech was this: The current level of the policy rate is likely to remain appropriate over the near term. This was in line his earlier view that Fed rates may not be altered until the end of 2019, as the U.S. economy navigates through a period of persistently low growth.

Meanwhile, Minneapolis Fed President Neel Kashkari, while speaking at the Sioux Falls Rotary Club event in South Dakota Monday, did not delve on monetary policy outlook but instead chose to emphasize the importance of immigrant workers for growth.

Anatomy Of The FOMC

The Federal Reserve Monetary Policy Committee, or consists of 12 members:

• Seven members of the Board of Governors of the Federal Reserve system.
• The president of the Federal Reserve Bank of New York.
• Four from the remaining 11 Federal Reserve Bank presidents, who are elected for a one-year term on a rotating basis.

The rotating seats are filled from the following four group of banks, with one bank president from each group:

• Boston, Philadelphia and Richmond.
• Cleveland and Chicago.
• Atlanta, St. Louis and Dallas.
• Minneapolis, Kansas City and San Francisco.

The remaining regional Fed bank presidents, who are not part of the committee are called non-voting members. They take part in deliberations on economic assessment and monetary policy but would not vote on the monetary policy decision.

Wide-Spanning Market Implications When Fed Changes Its Tone

Dove Vs. Hawk

The market perceives the messages from Fed officials as dovish or hawkish, depending on whether these call for an easy monetary policy or argue for tightening of monetary policy.

Accordingly, the FOMC members are classified as doves, hawks and the neutrals.

Taking into account the voting members alone, below is the current breakdown.

The Doves

• Janet Yellen: Fed Chairman.
• Lael Brainard: Member of Board of Governors.
• William Dudley: New York Federal Reserve Bank President and the Vice Chairman of the FOMC.
• Charles Evans: Chicago Federal Reserve Bank President.
• Neel Kashkari: Minneapolis Federal Reserve Bank President.

The Hawks

• Stanley Fischer: Member of the Board of Governors.
• Patrick Harper: Philadelphia Federal Reserve Bank President.

The Neutrals

• Jerome Powell: Dallas Federal Reserve Bank President.
• Robert Kaplan: Member of the Board of Governors.

This Week's Events

The schedule for the upcoming Fed speeches of the week:

• Chicago Fed president Charles Evans to speak on current economic conditions and monetary policy in a closed group interview with representatives of the press, in Chicago at 1 p.m. ET Wednesday.
• New York Federal Reserve Bank President William Dudley will deliver opening remarks and join a panel of New York Fed economists to answer questions after the presentation of the Economic Press Briefing on Wage Inequality in the Region, in New York. The event is scheduled at 10 a.m. ET Thursday.
• Federal Reserve Bank of Dallas President Robert Kaplan to speak at the University of Texas at Arlington Accounting Department Sixth Annual CPE Day in Arlington, Texas, at 9:40 a.m. ET Friday.
• Kashkari to take part in a moderated audience Q&A session at the Independent Community Bankers of Minnesota Annual Convention in Bloomington, Minnesota, at 11:30 a.m. ET Friday.