3 mo libor is now for all practical purposes is ‘under control’ and down about 50 bp since the last Fed meeting.

Market function risk seems to be behind us, and the talk has now shifted to weakness due to softer demand.

The question is what level of demand is consistent with ‘price stability’.

In other words, to not exceed potential non inflationary GDP (the Fed’s speed limit) demand has to be low enough to not continuously drive up food/fuel/import prices.

♥