Is The Fed Driving Us OFF a Cliff?

post: FED'S KASHKARI: I NOW SEE NEUTRAL FED FUNDS RATE AS CLOSE TO 3%.

Good evening. Thank you for inviting me to speak with you today and for the kind introduction. It is a pleasure to be in New York City among so many friends and former colleagues. At its September meeting, the Federal Open Market Committee (FOMC) reduced the target range for the federal funds rate by 50 basis points and released a Summary of Economic Projections (SEP) with a median projection of additional reductions in the quarters ahead. I supported the policy action and penciled in a baseline policy path slightly above the median. I did so because monetary policy was and remains moderately restrictive for an economy that appears close to equilibrium with respect to inflation and employment. The improved outlook for inflation and cooling of the labor market that occurred over the summer gave me greater confidence in achieving our dual mandate objectives. I believe it will likely be appropriate to further reduce the target range for the federal funds rate over time toward a neutral posture, with the size and timing of reductions depending on incoming data, the evolving outlook and the forward-looking balance of risks around this outlook. Over a policy horizon comprising the next few quarters, under my baseline outlook, the U.S. economy will continue to grow at a solid p post: MUSALEM WARNS: EASING POLICY TOO EARLY COULD HAVE HIGHER COSTS THAN WAITING post: MUSALEM SUGGESTS GRADUAL RATE REDUCTIONS ARE APPROPRIATE OVER TIME post: MUSALEM SEES PCE INFLATION CONVERGING TO 2% OVER NEXT FEW QUARTERS.