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Photo: Andrew Harrer/Bloomberg via Getty Images

Federal Reserve vice chairman Richard Clarida made waves on Wednesday with his decidedly hawkish tone.

Why it matters: All eyes have been on Fed officials as they telegraph their views on the economy and monetary policy.

  • With the economy progressing, everyone wants to know when the Fed will taper its quantitative easing program and when will it start hiking interest rates.

Driving the news: In a speech on Wednesday, Clarida said the surprising pace of economic improvement could justify an interest rate hike in 2023.

  • He expects the unemployment rate will fall from 5.9% today to 3.8% by the end of 2022, which he characterized as "maximum employment."
  • Along with inflation "well-anchored" at 2%, he says the "necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022."
  • "Commencing policy normalization in 2023 would, under these conditions, be entirely consistent with our new flexible average inflation targeting framework."
  • Treasury yields jumped when Clarida made those comments.

Yes, but: Clarida's term ends on Jan. 31, 2022 — meaning he won't have a say in the ultimate decision.

But, but, but: He’s not the only Fed official who thinks 2023 is ripe for rate hikes. In June, we learned that 13 of 18 members of the Fed’s policy-setting committee expected to see at least one rate hike by the end of 2023. The forecast among the group calls for two hikes during the period.

The bottom line: Expect various Fed members to continue voicing opinions that may conflict with Fed chair Jerome Powell or official policy statements. But keep in mind that no single voice necessarily reflects the consensus.

Go deeper

Taking stock of the market's roller coaster week

Photo: Angela Weiss/AFP via Getty Images

The stock market roller coaster ride this week was real.

Why it matters: This year was on pace to notch a rare milestone: a full 12-months without a pullback of more than 5% in the S&P 500 — until this week helped tip it further out of the running.

Breaking Biden's diplomatic logjam

Expand chart
Data: Center for Presidential Transition via Congress.gov; Chart: Will Chase/Axios

The logjam for reviewing and confirming President Biden's ambassadorial picks is finally starting to break.

Why it matters: Biden is far behind his predecessors in the rate at which his ambassadorial picks have been confirmed. The Senate Foreign Relations Committee will hold a series of high-profile hearings and votes this week to finally begin chipping away at the backlog.

15 mins ago - Politics & Policy

Democrats brace for staredown over paid family medical leave

House Ways and Means Committee Chairman Richard Neal. Photo: Win McNamee/Getty Images

Senior House Democrats are braced for battle with the Senate over whether paid family medical leave — a key priority for progressives — will be included in President Biden’s final budget reconciliation bill, lawmakers and aides tell Axios.

Why it matters: Sen. Joe Manchin (D-W.Va.) has indicated he wants to cut the program to reduce the bill's price tag. “Paid family and medical leave must be in the final package,” Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee, told Axios on Monday.