According to Reuters, St. Louis Fed president William Poole had the following to say during Q&A following a speech delivered last week:
Asked whether he was comfortable with futures markets' expectations for Fed interest rate moves -- contracts are currently pricing in two more Fed hikes -- Poole said: "yes, I think so".
Priced in they are indeed:
The release of the minutes from the January FOMC meeting did little to change the impression that the end is near... or not. From BusinessWeek online...
"They are definitely off auto pilot," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "Although another increase at the end of March seems likely, the statement in the minutes reinforces the view that future policy steps will depend more on the behavior of economic statistics."
... from MarketWatch:
"The general tone indicated some concern about modestly higher core inflation, but by no means any sense of panic," said Josh Shapiro, chief U.S. economist at MFR Inc.
"The tenor of the commentary is consistent with a general belief on the part of most FOMC members that the tightening process was nearing an end," although some surprise might alter this, Shapiro said.
... from the Financial Times...
Markets were broadly steady on the news. Observers said the comments were “nothing new” to the markets.
Brian Robinson, bond market strategist at 4Cast consultancy, said: “[The] minutes have not revealed anything that has not been conveyed by previous comments by various Fed officials.”...
“The comments certainly are consistent with Bernanke’s recent testimony, as well as with market expectations for at least one more more rate hike, if not more, depending on the disposition of the [economic] data through the spring,” said analysts at Action Economics.
...from Reuters...
"If the economy slows down, more hikes would not be necessary. But right now, there should be an assumption that the Fed would push rates toward 5 percent," said Charles Lieberman, chief investment officer at Advisors Capital Management in Paramus, New Jersey.
... from Bloomberg...
Some forecasters are predicting more rate increases. Bear Stearns & Co. today raised its outlook for the fed funds rate to 5.25 percent from 5 percent because of faster inflation and a lower jobless rate than the Fed predicted last week. Citigroup Global Markets Inc., which a month ago said the Fed would be done raising rates at this point, now expects the central bank to lift its main rate twice more to 5 percent.
... you get the idea. Most reports picked up on this piece of the minutes:
Although the stance of policy seemed close to where it needed to be given the current outlook, some further policy firming might be needed to keep inflation pressures contained and the risks to price stability and sustainable economic growth roughly in balance. In the view of some members, the possibility of additional policy moves was reinforced by readings on core inflation and inflation expectations that were somewhat higher than was desirable over the long run. However, all members agreed that the future path for the funds rate would depend increasingly on economic developments and could no longer be prejudged with the previous degree of confidence.
One interpretation: Neutral has arrived, now the question is whether, or how much, to tighten.