Says CPI is well below Fed's target

  • Fed risks giving the impression it's abandoning inflation target
  • Fed is sending the message that it's not committed to getting inflation back to target
  • Mon pol is not about what you do at the time but what you do in the future
  • Tools are there to keep easing
  • Baseline outlook isn't that we'll see deflation
  • The Fed message shouldn't be about last 10 days

The credibility of the Fed is his fear and that raising before targets are met might reduce that. It follows what I said about the PCE data and Mester touched on it about being proactive. There's members that want to wait to be sure and there's members that want to anticipate.

Who will get it right or does the mix of views give that balance to policy?

Kocherlakota wants to hit the target before raising