James Bullard, Interview: Central Banks and Inflation, a UBS panel discussion as posted on the St. Louis Fed website

“One of the templates here is the 1994 tightening by Alan Greenspan, which I’m sure you all remember to the “T”.  The ’94 tightening episode had the Fed increase the policy rate from what was then considered very low levels to about 300 basis points in a year and then in 1995, the second half of 1995 they actually pulled back a little bit on that and that put us on a balanced growth path that was stellar for the second half of the 1990’s.  GDP growth was four percent for many years in a row.  The unemployment rate went to the three percent handle. So, a beautiful outcome in the 1990’s.”

“The analogy here would be with all this front loading; we’ll do the front loading this year. It does cause disruption in financial markets.  We can talk about that too, but we’re asking people to shoulder that volatility.  Get the policy rate up to where you need it to be, for now, for this inflation situation that we have today.  And then, if all goes well and inflation starts coming down toward target, you won’t need the policy rate to be so high and we can do some of the cuts in the same way that we did in 1995.”

“You’d front load now.  You get up to a high enough rate to put downward pressure on inflation.  You get the disinflation dynamic going and then as that goes and is on path, you might lower the policy rate or other risks come up.”