Gone Fisher-ing in Mexico

FRB of Dallas president Richard Fisher tried really really hard to explain to the world that inflation is still a problem in a speech he gave in Mexico yesterday. Please read it. Please read it and tell me why the 10-yr was up 3/8 of a point yesterday. In order for you to read that AND think the Fed will probably cut in January, you have to either assume he is jaw-boning and doesn't really mean it, or he is unrepresentative of the opinions on the FOMC.

To the former, that's possible. But if he (and others) talk like this in public and then cut rates in a few months anyway, doesn't that hurt their hard won credibility? Isn't that contrary to their stated goal of increased transparency?

As for being unrepresentative, please find the dissenting opinion. Find the FOMC member or FRB president who is talking about how poor growth is and how we need to ease monetary policy pronto.

I think the Fed stays at 5.25% for most of 2007. That's consistent with the messages we are hearing from Fed governors. Why the market doesn't believe them, I'm not sure.