The Fed's Preparation for Inflation

There are very significant lag effects from the implementation of monetary policy to when it shows up in the real economy. So I think this gives the Fed the ability to maintain that pause, which is what it wants to do. It really has been focused on the inflation component of its dual objective policy. Now it needs to be thinking about full employment. That might sound silly right now. But I do think we are going to see a weakening of the economy, and that includes a weaken of the labor market.