These are the final scheduled Fed comments ahead of tomorrow's FOMC blackout.
- Timing of hikes will be based on wide range of data
- Next step is to gradually bring rates back to normal
- Expects inflation to get close to 2% in 2023
- Expects inflation around 2.5% this year
- Expects unemployment down to 3.5% this year
- Omicron wave will temporarily prolong and intensify labor supply challenges and supply-chain bottlenecks
- Expects omicron to slow growth in the next few months
- Doesn't know exactly what the path of the fed funds rate will be this year because it will be driven by data
- Fed has the ability to manage the balance sheet smoothly
There are no big surprises here. I think the possible surprise at this meeting is that the Fed ends QE altogether rather than tapering further.