- Full impact of monetary policy won't be felt for months
- Fed must look to economic signals other than inflation as policy guideposts
- Has seen clues that tighter financial conditions may be pinching commercial real estate and Banking
- He anticipates that more interest rate hikes will be needed
- Indicatiors or broad based easing of inflation needs to be seen
- there are glimmers of hope in goods inflation
- need to see services inflation to slow as well
- Labor remains tight, sees upward pressure on wages
- Number 1 job is to tame unacceptably high inflation
- Fed policy risks inducing a recession, but that is preferable to high inflation getting entrenched
- Recession is not a foregone conclusion
- Once Fed reaches appropriate restrictive policy, it needs to stay there until there is convincing evidence inflation is firmly on track to 2% target.
The roadmap remains in place for the Fed. Get to sufficiently restrictive. See that inflation is killed. Don't take foot off the brakes until that happens.
Goods is a supply and demand thing. Services can be stickier as once "menu prices" are changed, the businesses are more reluctant to lower those costs. The savings go into the pockets of the business owners. That include food, and entertainment but also things like repair services that have seen a large bump up.
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