Federal Reserve Chair Janet Yellen and her international counterparts are suffering from a case of what psychologists call confirmation bias: They keep insisting inflation will accelerate even as it continues to ebb.
‘Disappointing’ job gains will prevent the U.S. economy from growing as much as previously thought, according to Ethan Harris , head of North America economics at Bank of America-Merrill Lynch Global Research in New York.
Federal Reserve Governor Jeremy Stein endorsed a warning by economists that raising the main interest rate may cause a financial-market convulsion similar to the “tantrum” that occurred last year after the Fed said it was considering trimming its bond purchase program.
Ethan Harris, former chief U.S. economist at Lehman Brothers Holdings Inc., recalls packing his family photos and top research into a suitcase five years ago on the Friday before the company went under.
The unemployment rate in the U.S. will probably fail to drop below 9 percent in 2011, said Jan Hatzius , chief U.S. economist at Goldman Sachs Group Inc., and Ethan Harris , head of developed-markets economic research at Bank of America Merrill Lynch.