Fed Patient Inflation Self-Correction

"Inflation eased for the second consecutive month, rising at a 3.4% annual pace in July... Barring fresh escalations in the Iran war, inflation could continue to ease, dipping close to the Federal Reserve's 2% annual goal by this time next year."

"Headline CPI was up 3.4% year over year. When excluding food and energy prices, core CPI was up 2.5%. Well, the Fed-sensitive 2-year Treasury yield is moving lower in response."

"Philadelphia Fed President Anna Paulson said the current level of interest rates is enough to drive inflation back to the central bank's goal, and that current policy 'has been mildly restrictive to get underlying inflation back down to 2% in an acceptable time period.'"

""Given the strength of demand and investment, I do not see the current stance of monetary policy as restrictive," Schmid said Tuesday in remarks prepared for an event in Omaha. "As such, I believe that bringing inflation down to the Fed's 2% objective will require tighter policy.""

"Federal Reserve Bank of Kansas City President Jeff Schmid suggested higher interest rates are needed to achieve the Fed's price stability goals, and reiterated that inflation is his primary concern."

"Three Federal Reserve officials who dissented at last week's policy meeting in favour of an interest rate hike expressed concern on Friday that without an immediate increase in short-term borrowing costs, inflation will stay stuck above the Fed's 2% target, where it has been for more than five years."

"Williams noted that 'if the economy is not on a trajectory that will bring inflation back down to 2% ... it would absolutely be appropriate to act to get us on ​a trajectory that does bring inflation back to 2%.' Williams stated the Fed will raise rates if inflation does not slow."

"Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability."

"For five years, the Fed has missed its 2 percent inflation target, an overshoot that Mr. Warsh has pledged to fix. The Fed's preferred inflation gauge, as measured by the Personal Consumption Expenditures price index, was 3.7 percent as of June."

"The three dissenting votes were cast by Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan – each of whom raised concerns about inflation persisting above the central bank's 2% target and said they would've preferred raising the federal funds rate by 25-basis-points."