Speaking on Bloomberg Radio:
- Fed is getting closer to the time to consider normalizing
- Monetary policy is data dependent
- ‘Patient’ means no move in next couple meetings
- We will see inflation in 2015 well below 2%
- We are getting close to thinking about the pros and cons of raising rates
- Monetary policy acts with a lag
- Lift off will be driven by progress on jobs and outlook on inflation
- Market views on lift off timing are ‘relatively reasonable’
- We could delay lift off if inflation stays too low
Yellen was clear, and there is an increasing sense the Fed wants to look past low inflation in 2015 to a pickup in 2016 but hiking rates when inflation is flat-lining will prove tough.
