Is the Fed reasonable confident that inflation will pick up?
Bloomberg had an interesting tidbit earlier this week on the FOMC minutes. They spoke with former Fed officials who revealed that the line "it was noted" was a codeword that very frequently referred to a comment from the Chair, dating all the way back to Greenspan.
That sent us scrambling through recent FOMC minutes but there wasn't much there except in March, when there was this.
"Participants expressed a range of views about how they would assess the outlook for inflation and when they might deem it appropriate to begin removing policy accommodation. It was noted that there were no simple criteria for such a judgment, and, in particular, that, in a context of progress toward maximum employment and reasonable confidence that inflation will move back to 2 percent over the medium term, the normalization process could be initiated prior to seeing increases in core price inflation or wage inflation."
That shows Yellen is willing to hike before core inflation rises as long as she's reasonably confident that inflation is coming.
I believe the Fed badly wants to hike. Lockhart telegraphed his vote two weeks ago and he swings with the consensus.
If the Minute contain any hints that the Fed is already 'reasonably confident' of a pickup in inflation.
