Hoenig hones in on inflation (I've got a million of these!)

Federal Reserve Bank of Kansas City president Thomas Hoenig gave a speech in Albuquerque last night, somehow able to put aside his woes over another pathetic season for the Kansas City Royals. Hoenig has been with the KC Fed in some fashion FOREVER. Before Greenspan, before Volcker, there was Hoenig. I wonder if he was pissed that he was never serious considered for the top job when Greenspan retired. Do you think he sits in FOMC meetings making those sort-of jealous, under-your-breath criticisms of Bernanke? Like he leans over to one of his staff economists and says "Volcker would never have used this color combination for the graph of GDP versus potential GDP. It just looks amateur."

OK, probably not.

Anyway, the speech isn't on the FRB of KC website yet, (who's amateur now Tommy?) but here are the highlights. He described the current monetary policy stance as "modestly restrictive. It's not tight, but modestly restrictive." He said that the Fed's "major challenge" is to bring core inflation down to around 2% (currently 2.8%). "Inflation, honestly, right now is too high." However, he goes on to say that the rate moves already made would take time to have an effect. So on the whole, it sounds like he's in favor of keeping rates about where they are until there is more evidence of a slowdown. Which is consistent with what I've been writing about for the last few weeks.