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Mr Duy writes:Many policymakers are ready and eager to normalize policy, and they see economic improvements as consistent with normalization.
But they are also concerned that any new dose of monetary medicine could carry unintended side effects, making it harder to normalize policy in the future.
The Fed walks a delicate line as it seeks to normalize policy.
One oft-stated worry is that when it is time to normalize policy, we will be unable to withdraw reserves as quickly as needed to prevent an unwanted rise in inflation.
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On the face of it, this implies that the Fed remains confident the economy is finally shaking off the aftereffects of the Great Recession, which would allow it to go ahead and begin to normalize monetary policy.
As it seeks to normalize monetary policy, the Federal Reserve has begun scaling back some of its broad interventions, like a program to buy troubled mortgage-backed securities.
"At this point, with a modest recovery under way and inflation low and stable, I believe the economy would be better served by beginning to normalize monetary policy".
"There may be growing pressure to take nominal steps to normalize monetary policy, such as a 25 basis point hike in early Q2, perhaps," said Vishnu Varathan, an economist at Forecast in Singapore.
That will most likely give the Fed leeway to keep interest rates low for an extended period, though the central bank is expected to begin taking more substantial steps to normalize monetary policy toward the end of the year.
"Should it be the case that short-term interest rates rise, which of course could happen if the economy recovers and we need to normalize monetary policy, then those remittances could go down," Mr. Bernanke said Friday.
The softness of the recent numbers has significantly reduced expectations for a series of aggressive rate hikes by the BoJ, which last year spooked the markets by making very clear its intention to normalize monetary policy as soon as possible.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com