The Fed is so far behind the curve. They should have started increasing in quarter point increments two meetings ago and at the very least, raised the fed funds rate 25 points last meeting. Now we have to wait until the middle of March before they do anything
The CME Fed Watch tool is saying a 98.4% chance of a 50 point hike. I hope the FOMC is able to admit they were wrong and tries to get ahead of inflation with a 50 point increase. I worry that they have a strong incrementalist desire, though, and will only do a 25 point hike.
Do you think that they should have started tapering the asset purchases earlier? The part that is confusing to me as someone that is not an expert is why they are trying to raise rates 50 points before they even slowed the asset purchases.
Yes, they should have started tapering earlier. I am a lot more hawkish than the average Fed governor/district bank president. I think they should have started tapering 6-9 months ago and started raising rates 3-6 months ago.
I don't think they should start raising the fed funds rate before they start tapering asset purchases, though I think they could start raising their target for the fed funds rate as they are winding down tapering. As it is, tapering should be complete in March, so there is no reason they couldn't have started increasing the target for the fed funds rate at the January meeting.