• Should let Fed balance sheet shrink to pre-crisis level of $1 trln
  • If don’t withdraw easy money soon will risk introducing new global imbalances, inflation pressures
  • Longer policy remains as it is, bigger the inflation risks
  • Some rise in commodity prices due to accommodative policy is US, elsewhere

Hoenig is the Fed’s hawk of hawks and is saying nothing he has not said before. He is a less lonely hawk these days as more members of the FOMC begin to move back to his side of the debate.

Hoenig announced his retirement earlier this week and is expected to step down October 1…