I’d like to see some evidence that what we believe to be transient factors driving recent weak inflation readings are, in fact, passing. I would like to see firming of inflation readings. This will give me confidence that the outlook on which important decisions will swing remains realistic and likely to play out.
Inflation is appropriately a focal point because its firming will reduce concerns that the economy is somehow stalling, that prophesies of long-term stagnation have any basis, and that chances of accomplishing the FOMC’s policy goals are receding.