- The economy is doing and giving us the flexibility to move carefully and methodically
- We have to see firm evidence of improvement on rates
- If we think we have to move faster on rates, we can but key is that we have flexibility
- It will be up to committee on timing of when to start cuts
- We're in an unusual place where we can move rates down without a shock to the economy
- There are things we want to be careful about
- Whether we miss the timing on rate cuts by six weeks, it hard to believe that's going to have a big effect on the economy
- Once supply adjustment is complete [from the pandemic], it will be clearer whether demand is falling enough to finish the inflation fight, it's an issue to watch.
- Approx endpoint for reserves is likely around 10-11% of GDP ... overnight repo doesn't need to have anything in it
- 4% wage growth is a 'little high' but not much
This was a good interview and there's some focus on the comments on the balance sheet and how a taper might unfold. Overall, the odds of a March cut have dipped while the market still sees 159 bps this year, which is more than double the 75 bps that Waller highlighted in the dot plot.
