«Were the FOMC to delay the
start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals,» of price stability and full employment, Yellen said.
If a dwindling ISM translates into diminished growth momentum, this could in turn diminish policy makers» confidence that the economy can endure the
initiation of policy normalization later this year.
«Should economic indicators continue to improve and the
pace of policy normalization picks up, we will eventually see the end of incredibly low mortgage rates and corresponding high affordability.»
The Bank of England (BOE) and European Central Bank (ECB) are the latest bodies to begin the slow process
of policy normalization.
Though they did say that «Interest rates will gradually rise as the Federal Reserve continues on its path
of policy normalization.»