“We want to raise rates. But how can we do that if inflation expectations, contrary to my beliefs, is falling together with unemployment?”
If she only looked at what´s happening with the “guiding light”, she would, not only understand what´s happening but would know how to solve the “conundrum”.
By not “seeing the light”, she gives an opening to discussions such as this at the FT: “What if rates never rise?”:
Readers might recall that it is barely a month since the FT devoted a week to a series called “When Rates Rise”. Things have moved on since then. The Federal Reserve decided not to raise rates, as once widely expected, last month. And after pronouncements from various Fed governors in the past week, the markets are asking a new question.
Maybe our next series needs to be titled: “What If Rates Never Rise?”