The U.S. Federal Reserve wants to get monetary policy back to normal without scaring or surprising the financial markets. Now, try defining "normal," and you can see it's going to be difficult. A vital instrument of abnormal monetary policy has been the promise to keep interest rates at (roughly) zero for an extended period. Once rates have been raised off that floor, this kind of time-based commitment no longer works. Ordinarily, incoming data would (or should) dictate how quickly interest rates go up. Quite possibly, if inflation fails to rise to its 2 percent target, the data will call for more rate cuts. The ... (full story)