How quickly should the funds rate target move up to this neutral level? And how will the neutral rate itself evolve over time? To help answer such questions, the FOMC considers a voluminous amount of information concerning many factors, including financial markets and credit availability, labor market conditions and overall economic activity, wages and prices, and foreign economic developments.
Accordingly, therefore, monetary policy will be preemptive, as necessary, in order to mitigate secondround effects relating to unsustainable demands for wages and other domestic resource increases, which would lead to a further spiralling of inflation. It is just as important to anchor expectations of low and stable inflation.