State and local budgets can be corrected by small changes in the relative growth rates of spending and tax revenues, rather than by jarring policy initiatives.
Under these conditions, policy makers will want to maintain a continued period of very low interest rates and highly accommodative financial conditions to propel aggregate demand well above the upper end of reasonable estimates of potential growth,
Fighting against rising interest rates just seems a waste of time. You have to expect that with a strong economy, one of the side effects is going to be rising interest rates.
For the Fed, recent developments present an additional challenge because data hint that officials might need to risk an overshoot, moving rates into restrictive territory.
You've got this awkward confluence of a Fed that's getting nearer and nearer to some critical level of rates and an inflation forecast that has been more in doubt or more in play than it has been for some time,