Comments from the Fed vice-chair
- Going forward, a low unemployment rate, in and of itself, will not be sufficient to trigger a tightening of monetary policy absent any evidence from other indicators that inflation is at risk of moving above mandate-consistent levels
- It will take some time for economic activity and employment to return to levels that prevailed at the business cycle peak reached last February
- We are committed to using our full range of tools to support the economy until the job is well and truly done to help ensure that the economic recovery will be as robust and rapid as possible.
- I expect most of increase in prices to be transitory and for inflation to return to-or perhaps run somewhat above-our 2 percent longer-run goal in 2022 and 2023. This outcome would be entirely consistent with the new framework we adopted in August 2020
- Rising yields reflect optimism about the recovery and fiscal support
The messaging from the Fed has been very consistent since the FOMC and there’s nothing new here. The real test will be whether the Fed blinks or the market does, because there’s a game of chicken going on right now.