Asks for reflection on the unified call from officials to preserve Fed independence.
Romaine Bostick
Thomas Hoenig
Fed independence is crucial for low inflation long-term. Current political pressure is more direct and heavy-handed than usual. It creates uncertainty, which can interfere with economic performance.
Asks if he sees a need for any change in monetary policy given recent data.
Romaine Bostick
Thomas Hoenig
No need to decrease or increase rates now. The economy has tailwinds: strong Q3/Q4, stimulative fiscal policy (large deficits), and monetary policy where real rates are less than 1%. Inflation is closer to 3%.
Asks if we should be comfortable with inflation slightly above 2% given strong growth and earnings.
Romaine Bostick
Thomas Hoenig
No. Inflation eats away at the economy over time. 2% is arbitrary but the mandate is price stability. Accepting 3% now risks accepting 4-6% later. Inflation can be brought down to 2% slowly and systematically without causing a recession.
Asks if the upcoming FOMC meeting will have an honest debate focused on data, not politics.
Romaine Bostick
Thomas Hoenig
Yes, personally thinks so. Committee members will be conscientious about a clear analytical decision because they know they'll be questioned.