Warsh Tomorrow …

One has to keep in the back of your mind that Fed Chairman Kevin Warsh has explicitly linked Quantitative Tightening (QT) to a broader strategy for addressing supply side inflation, framing it as part of a “pragmatic monetarism” approach. It is not anticipated that will be the tool implemented tomorrow, it will take at least another meeting to educate the older Governors, but in the conference call he may talk about it as one of the tools in the tool chest and if things on the inflation front do not stabilize, that tool will need to be brought out.

I would see the primary goal at this meeting is to first do a little catchup in rates, 0.25 points, but more importantly instill a belief that embedded inflation expectations have to be dampened.