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Question On The Bias For December Decision

FED
  • Q: Is the bias right now not for another 75bp hike in Dec?
  • A: Three questions in our tightening: first is how fast, second is how high, and eventually, how long to remain at a restrictive level.
  • On 1) it's been important that we move expeditiously. Fast pace has been certainly appropriate.
  • On 2) There is some ground to cover before we meet that test. That's why we say ongoing rate increases will be appropriate. incoming data between the meetings, both the strong labor market report but particularly the CPI report suggest to me that we may move to higher levels than we thought at the time of the September meeting. That level is very urn certain, though. I would say we're going to find it over time.
  • Of course, with the lags between policy and economic activity is a lot of uncertainty. So we note in determining the pace of future increases will take into account the tightening of monetary policy as well as with the lags that affect economy activity and inflation.
  • As we move more into restrictive territory, the question of speed becomes less important than the second and third questions. That's why I've said it's appropriate to slow the pace of increases. So that time is coming. And it may come as soon as the next meeting or the one after that. No decision has been made. It is likely we'll have a discussion about this at the next meeting, a discussion. To be clear, let me say again, the question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive which will be our principle.
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