One message you should take away is that the course of policy is not pre-set, and the course I favor will be determined by my interpretation of new data. In the past couple months, inflation and employment data have been sending the same, unequivocal message—it is time to start tightening monetary policy.
Except where market discipline is undermined by moral hazard, for example, because of federal guarantees of private debt, private regulation generally has proved far better at constraining excessive risk-taking than has government regulation. 2  Recent spikes in some credit default swap spreads do not appear to have induced significant stress, although this experience has been too limited to be definitive.