Note that the December meeting will be the final one for Evans before he retires.
- There's ample capacity to hike even with smaller increments
- Inflation lags more than the real economy, need time to assess
- A 50 bps hike is still a very large hike
- Inflation reports are still likely to be disappointing
- If inflation isn't favorable and you still want to hike expeditiously 'you can do 50 bps repeatedly'
- It's likely Fed funds peak will be revised 'slightly higher' in December
- Fed is looking for the right level of restrictiveness
This is the first indication of how much higher the Fed is thinking about going in 2023. 'Slightly higher' might puts anything in the 4.75-5.50% range in play. The Fed funds market is at 5.10%.