Clarida Sees Fed Rate Liftoff in 2023

The transcript discusses the projected core PCE inflation, highlighting that if it exceeds 3%, it would be more than a moderate overshoot of the 2% goal. It addresses the risks to the inflation outlook, particularly the potential for an upside. The FOMC's outcome-based threshold guidance is explained, which includes conditions for increasing the federal funds rate. These conditions involve labor market conditions, inflation reaching 2%, and being on track to exceed it. The transcript concludes with the belief that these conditions might be met by the end of 2022.

What is the projected core PCE inflation rate for this year, and how does it compare to the Federal Reserve's longer-run goal?

• Exactly 2%, which meets the goal

• Below 2%, which is below the goal

• At or above 3%, which is much more than the goal

• Between 2% and 3%, which slightly exceeds the goal

What are the three conditions specified by the FOMC's outcome-based threshold guidance?

• Maximum employment, inflation at 2%, and stable GDP growth

• Maximum employment, inflation at 2%, and inflation on track to exceed 2%

• Stable GDP growth, inflation below 2%, and maximum employment

• Inflation below 2%, stable GDP growth, and maximum employment

According to the FOMC's guidance, what must happen before considering an increase in the federal funds rate?

• GDP growth must exceed 5%

• Three specific conditions must be met

• Unemployment must rise significantly

• Inflation must fall below 2%

What is the current stance on raising interest rates according to the transcript?

• Interest rates will be lowered instead

• Interest rates have already been raised

• Interest rates are likely to be raised soon

• Raising interest rates is not currently being considered

By when does the speaker believe the conditions for raising the target range for the funds rate will be met?

• By the start of 2023

• By mid-2022

• By the end of 2022

• By the end of 2021