That would be a bit below where rates were at the outbreak of the pandemic, when inflation was considerably lower, and before we more than doubled the Fed’s balance sheet, so I consider this a necessary and prudent start to tightening policy. The pace of tightening will depend on the data.
One possibility is that the target range is raised 25 basis points at each of our next four meetings. But if, for example, tomorrow’s PCE inflation report for January, and jobs and CPI reports for February indicate that the economy is still running exceedingly hot, a strong case can be made for a 50-basis-point hike in March.