Comments from the Fed
- We will react to data itself, not forecasts
- We won't tighten solely because of a decline in unemployment
- Accommodative policy will remain until some time after goals met
- Full text
Quotable:
"In our new framework, when in a business cycle expansion labor market indicators return to a range that in the Committee's judgement is broadly consistent with its maxiumum-employment mandate, it will be data on inflation itself that the policy will react to."
Expect to hear more from him because he will take questions from the moderator afterwards.
In terms of implications, we've heard this before and the market has absorbed the message. However the market is not convinced that the Fed has the guts to look through a period of above-2% inflation without blinking.
Here's an interesting thing to follow, highlighted by Clarida:
I follow closely the Fed staff's index of common inflation expectations (CIE)-which is now updated quarterly on the Board's website-as a relevant indicator that this goal is being met.
