Fed's Williams still sees 2015 rate hike after 'close call'
Fed's Lacker says economy strong enough for higher rates
St. Louis Fed's Bullard says argued for rate hike at meeting
And WSJ's Greg Ip gives us the Yellen perspective:
The monetary doves have won the battle, but not the war. Not yet.With Yellen's failure to hike rates last Thursday, she has revealed herself to be more G. William Miller than Paul Volcker.
In deciding to stand pat on interest rates, the Federal Reserve cited many of the reasons that some vocal opponents of tighter credit—the “doves”—have advanced for keeping rates near zero.
The Fed acknowledged a troubled global economy and market turmoil have cast a shadow on both U.S. economic growth and inflation, still well below the Fed’s 2% target.
But these were tactical considerations. Janet Yellen, the Fed chairwoman, and her colleagues still think they’ll be ready to boost rates by the end of this year after the fog lifts from the global economy and markets...
Still, Fed officials remain more optimistic than the markets. Despite revising down their projected path of rate increases, they see rates rising by more than investors expect. By the end of 2017, the market thinks the Federal-funds rate will be just 1.25%, about half what Fed officials believes.
It is unclear when Yellen will start to raise rates, but it is noteworthy that the mainstream is running four stories (on a weekend) suggesting the Fed was close to pulling the trigger. My view is that markets will eventually force Yellen to raise rates, if she doesn't do so on her own.
That said, I view the idea, that by the end of 2017 the Fed funds rate will only be at 1.25%, to be way off. I'm thinking 5% plus.
Sentance is correct here, a sharp spike upward in interest rates is very likely.