Fed's Musalem says hiking rates now could save more aggressive action later

• Strong growth and investment is influencing bond market
• Fed credibility is not in question
• Fed is focused on making monetary policy independent of fiscal policy
• Monetary policy is neutral or accomodative right now
• Financial conditions are pretty accomodative here
• Number one concern of public is inflation
• Businesses are facing high input costs
• Super El Nino might be next supply shock
• Given current Fed rates, see lower probability of getting inflation to 2%
• Hiking rates now could save more aggressive action later
• Underlying inflation is between 2.5-3.0%, and it's too high and must be lowered
• Productivity is seeing a recovery
• The best thing the Fed can do for growth is get inflation back to 2%
• Forward guidance is useful when rates are at zero
• Forward guidance suggests committment, communicating a framework is different
• When you have supply shocks, you have to look at core inflation
• Won't prejudge upcoming FOMC meeting

This article was written by Giuseppe Dellamotta at investinglive.com.

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