Must-Read: The Fed Is Closer to Hitting Its Inflation Target Than People Think: "I sense there is a growing confidence among policymakers that wage growth will soon accelerate...:
...That confidence is likely sufficient enough to move the Fed closer to the first rate hike. Still, hard data is better than anecdotes. Solid evidence of accelerating wage growth in the next two labor reports would go a long way toward convincing FOMC members that they could safely move in September.... While [Yellen] is viewed as supporting only a single hike in 2015, there’s no reason to believe that hike must come in December. Yellen has made two points abundantly clear with respect to policy normalization: She prefers ‘early and gradual’ over ‘late and steep,’ and she anticipates policy will not be on a preset path as it was in the last tightening cycle.... Yellen could move in September and, if justified by the data, deliver only one 25-basis-point rate hike in 2015, while at the same time throwing the Fed hawks a bone.