Unfortunately the Federal Reserve Bank of Chicago’s website hasn’t posted Evans speech titled the “Great Inflation Debate” even though he’s already given it this morning but I’ll rely on newswire quotes to give you a gist of what he said. In response to the predominant inflation concern resulting from a doubling of the monetary base over the past year and a massive rise in bank reserves, he said we won’t get inflation until the velocity of money picks up through “more expansive bank lending.” But, when that does happen, “and when we see rising inflation pressures, Fed policy will respond aggressively” and not as methodically as in 2004. It does seem the Fed will be very patient in removing the extraordinary accommodation as he said rate hikes are “some time down the road.” Instead of ready, aim, fire, he said their response will be “prepare, monitor and act.”
What's been said:
Discussions found on the web: