Earlier here:
Fed's Williams says the Bank must be data-dependent & transparent
More now (Headlines via Reuters )
- uncertainty around the economic outlook is great and situation in Ukraine adds to that
- for the us, first direct effects of Ukraine crisis are higher energy prices factoring into higher inflation
- a negative supply shock to oil can have a hit on consumers' ability to spend
- people still have a lot of savings built up to support spending
- the economy is coming into this with a lot of forward momentum
- says longer term inflation expectations are not moving that much
- Fed has to take actions to get inflation back down to 2% goal and make sure inflation expectations stay anchored
- consumers are willing to pay higher prices when demand is strong
- businesses are facing higher costs from wages or import prices and other things
- pricing power will shift as supply shortages are addressed
- some adjustments in demand and labor market may take longer than initially expected
- there's a lot more labor supply out there, it will just take a while to see how much and when it comes back
- Fed doesn't know exactly what the fed funds rate will be next year because it will depend on the economy
- it's clear with inflation so high that the fed needs to get monetary policy away from where we are today
- Fed should move the fed funds rate above near zero levels through a series of rate increases
- Fed will want to move the balance sheet back to more normal levels
- says this is the year of both moving the fed funds rate to more normal levels and also of starting balance sheet reduction
