Why Dovish Critics of the Fed’s FOMC Statement Are Wrong

Some observers of the Fed were complaining Wednesday that the FOMC statement should have rolled back plans for a mid-2015 rate increase. In their view, reduced rates of inflation observed currently, along with the strong dollar and weak nominal wage growth, should lead the Fed to postpone any rate increases. Such concerns are dead wrong. They reflect a deep misunderstanding of the time lags inherent in the removal of accommodative monetary policy, and confusion about the proper way to target inflation. Dovish critics are also wrong about how the Fed should respond to lower oil and gas prices, the strong dollar, and slow wage growth.

READ FULL ARTICLE HERE