Any doubt they would raise rates immediately (through a Conference Call)? However, that was the combination that existed in September 2011 (“9/11”), when QE3 was still to come!
Today both headline and core are far from target, but Yellen is all the time “justifying” the need for a rate increase soon:
“Policy makers cannot wait until they have achieved their objectives to begin adjusting policy,” Fed Chairwoman Janet Yellen said last week in a speech:
“I would not consider it prudent to postpone the onset of normalization until we have reached, or are on the verge of reaching, our inflation objective.”
The “heartbeat” of nominal and real growth has not changed during this time, remaining close to 4% and 2.2%, respectively year on year.
Overall, both measures of inflation have been well below target for most of the time since 2008.
What has changed is unemployment, which has dropped from 9% in September 2011 to 5.5% in February 2015 and is getting “dangerously close” to her latest “estimate” of NAIRU (5% – 5.2%)!
She should remember James Tobin, her thesis adviser at Yale who, on the year she was awarded her PhD, 1971, wrote “Living with Inflation”. Only now she wants to change that a bit and push for “Living without inflation”!
So I find Tony Yates´ “insistence” on raising the inflation target “romantically naïve”!
Historinhas 
In Japan, the unemployment rate is 3.5%, yet they are struggling with deflation. Lessons?
In the United States, the connection between unemployment and inflation is very weak, I call it the “Phillips Phlat Line.”
is the Fed still haunted by 1970s-era ghosts? Fighting a war won 40 years ago?
It is agonizing to ponder how much industrial and economic output has been cut by an overly tight Fed policy.
Also, don’t forget the 10-year TIPS spread hit a low of 1.7% in Sept. 2011. They Fed did the right thing: target the forecast! The spread quickly rebounded to 2.6% and then decreased to 2.2% (which is pretty much the Fed’s target, considering 2.2% CPI is like 2.0% PCE) and plateaued there from mid-2013 to mid-2014.
Then the Fed let that TIPS spread go down to 1.6%, way under target. It has increased a bit since (to 1.8%), but the market is still expecting under-target inflation for the next decade. The Fed could probably go back to 2.2% with QE4, and taper if and when the spread reaches 2.6%.
(Ideally, of course, they would target the forecast of now-unexisting GDP-linked treasuries)
LK, you are course quite right. I´m eager to read the posts BB will be writing!