St Louis Fed President's words will go down in infamy
Once again today, US stock markets have erased gains as oil prices sink.
St Louis Fed President James Bullard is proof embodied that accurate forecasting isn't a job requirement for a central banker.
"If you've followed my forecasts, you've probably lost a lot of money," he said in a statement that should have disqualified him from holding the economic reigns on anything.
Yet he continues to make forecasts and is one of a very select group of people who set interest rates at the world's most important financial institution.
At this time last year, he said the market was too dovish on the Fed rate outlook (he was wrong) and that the oil price drop is a "very unambiguous positive for the US."
A year later and it's falling oil prices, worries about a blow-up in junk energy bonds and a slowdown in the United States' commodity-exporting trade partners that is hurting markets.
Even the US economy lost 0.5 pp in growth in the first half of 2015 because of lower oil company investment, according to Goldman Sachs. The purported consumer benefits aren't materializing either. Retail sales were softer than expected in December and had the worst year-over-year climb on record.
What does it mean for the dollar?
The thing about the Fed is that it's not the only central bank to be wrong about where the global economy is, and where it's heading.
Bullard has shown an ability to admit he's been wrong. Will the rest of the Fed? If they do, the US dollar probably has the most to lose because two rate hikes are still priced in this year.
