Investors are clearly obsessed with the question of when the Federal Reserve will first raise rates. Yet it's the pace of future increases that could ultimately be more important for risk assets.
Fed presidents James Bullard and Jeffrey Lacker made headlines this week when they told reporters that the any rate hikes after the first one will not necessarily be gradual, and will not be on a predetermined path.
To be fair, they are among the most hawkish members of the Federal Open Markets Committee. Lacker's was the the lone dissent to the Fed's decision not to raise rates in September, and Bullard has said that he would have dissented had he had a vote, which he will in 2016.
Still, the idea that subsequent rate target increases will be gradual no matter when the Fed hikes has become a key part of market speculation. Fed chair Janet Yellen frequently directs attention away from hike number one to the slow hikes beyond it.
Meanwhile, Bullard's and Lacker's comments served to remind investors that if the Fed's actions are truly data-dependent, such vows can really only serve as a forecast.
If inflation finally picks up, as the Fed's hawks expect it will, the central bank would obviously be hard-pressed to increase rates rapidly in order to fulfill its mandate to maintain stable prices — particularly since the "maximum employment" side of its mandate appears to be well-met with job creation on the rise.
But that doesn't prevent the doves from suggesting a promise-heavy policy path.
"It is critically important to me that when we first raise rates the FOMC also strongly and effectively communicates its plan for a gradual path for future rate increases," Chicago Fed president Charlie Evans said in a Thursday speech.
He explained that if the committee failed to provide such guidance, it would be an "important policy error" because it might induce people to believe the Fed "is less inclined to provide the degree of accommodation that I think is appropriate for the timely achievement of our dual mandate objectives."
Whether or not such a belief would be justified is a separate question entirely.