Sunday, October 19, 2003


Maybe the more experienced Fedwatcher Brad DeLong will correct me, but I don't think it's really normal for the Treasury Sec. to be commenting on expectations about the Fed's actions.

Enjoy the ride on bond prices tomorrow..

...Revise and resubmit:

BANGKOK (Dow Jones)--A senior Bush administration official Monday sought to clarify comments on interest rates made by Treasury Secretary John Snow and said Snow was talking about general economic theory and not about U.S. policies.

The Times of London interviewed Snow and quoted the Treasury Secretary as saying he would be "frustrated and concerned" if U.S. interest rates did not begin rising at some point in the future.

The senior administration official said that Snow was only pointing out that when economies begin picking up steam, there is an increased demand for money which naturally pushes interest rates higher.

The U.S. official said Snow was not talking about U.S. monetary policy nor was he indicating Treasury yields would rise.

The U.S. Federal Reserve sets monetary policy, and it is independent of the Bush administration.

Snow's comments initially triggered a rise in the dollar on foreign exchange markets after some market players came to the conclusion he was talking about U.S. policy in his comments.

Even if the reporter muddled the story, if the quotes are correct he went far beyond what is being said in this "correction."