Kansas City Fed President Esther George said yesterday, “I continue to see several advantages for a steady and deliberate approach to raising the policy rate.”
“Without question, monetary policy must respond decisively to high inflation to avoid embedding expectations of future inflation,” she said. “A more measured approached to rate increases may be particularly useful as policymakers judge the economy’s response to higher rates”.
“As the tightening cycle continues, now is a particularly important time to avoid unduly contributing to financial market volatility, especially as volatility stresses market liquidity with the potential to complicate balance sheet run-off plans,” George said.
“The degree of tightening necessary will only be determined by observing the dynamics of the economy and inflation and cannot be predetermined by theory or pre-pandemic benchmarks,” George said.