The FOMC is trying to present the more unified case for rates and tonight Yellen will muddy the water more with a chat. As the Fed bashing has heated up this past week, we have been happy to point out the policy directive is openness, not correctness. As long time Zip It advocates, we are taking pleasure in the bull market in monetary policy confusion.
The Fed tilt in our view remains, if not for x, we would raise the rate (insert inflation or global issue into x). The graph above - clicketh to maketh bigger - shows the KTF ( I heard that guy was awesome) model for the NEUTRAL funds rate. This is the rate the market would set it if it was the market's choice, the level that is neither easy nor snug.
The Fed desk under Potter is using a "belt and suspenders" approach to policy tools. Vocalizing the intent and firing the Death Star. Their fear is they can't raise the floor. The picture above shows movement in the proper direction but no support, yet.