Specifically: “To remain in a floor system, the Federal Reserve would need to supply enough reserves to satisfy bank demand along the flat portion of the reserves demand curve.
We will be helped in this by the pressures to increase mortgage rates already in the pipeline, by the tightening international bond rates, and by the increasing sensitivity of indebted households to monetary policy. We will be watching closely for signs of further slowing over coming months. But we cannot reduce inflation and reduce external imbalances alone.