Federal Reserve Alert! Kansas City Fed President Esther George: "These large moves in the policy rate are likely to increase uncertainty around future policy action."

Source: https://www.spglobal.com/ratings/en/events/webcasts/north-american-leveraged-finance-poolside-chat-october-14

"These large moves in the policy rate are likely to increase uncertainty around future policy action. to the extent we can minimize this policy uncertainty during a time of heightened market volatility I think is particularly important"

"I have been in the camp of steadier and slower to begin to see how those effects from the lag will unfold," "The full effect on the real economy is likely still playing out."
  • The economic landscape is murky, no clear narrative on the outlook for growth
  • Only clear data is that inflation is high. Is watching if persistently high inflation seeps into expectations
  • Faster supply growth is not likely to take care of the inflation problem
  • The Fedโ€™s monetary policy needs to move into restrictive territory, but how restrictive remains to be seen as policy actions have a lag
  • Expects rates will have to move higher for a sustained period, but moving too fast could disrupt financial markets
  • The Fed needs to minimize policy uncertainty during the time of market volatility and supports ongoing interest rate increases
  • CPI report on Thursday is a reminder the Fed has more work to do on inflation
  • Her forecast does not call for a recession
  • The Fedโ€™s terminal rate may have to be higher and stay there for longer, but I am more cautious than most about how quickly we do that
  • It is important to get inflation back to the 2% goal, she has a hard time arguing in favor of a different inflation target
  • Can't say with any confidence how long rates will remain high after reaching the peak
  • Fed will continue on a tightening path until inflation is turning around

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