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Question On House Prices & The Market Reaction Following The Decision

FED
  • Q: House price falls aren't showing up in gov't measures; are you going to take that into account when focusing on how much policy has tightened? Bonds are reacting positively to your announcement, is that something you wanted to see?
  • A: Conceptually, rents for all tenants makes sense for mon policy, not rents for just new leases. Same is true for OER. The private measures are good at picking up new leases, at the margin. They tell you a few things - it's pro-cyclical; rents went up much more than CIP and PCE rents did, and now they're coming down faster.
    • Right way to think about inflation is to look at the measure we look at but at some point you will see rent inflation coming down.
  • Re market reaction: Our message - we think we have a ways to go with rates before we get to a sufficiently restrictive level. Putting that in a statement is an important step. It's meant t put that question as the most important one going forward. Incoming data suggests the level of rates will be higher than we estimated in September. That's been the pattern. If we did SEP today, that will go up. There's no sense that inflation is coming down. It's premature to discuss pausing - not something we're thinking about.
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