• The next phase is not when to reduce rates, even though that’s where the markets are at
• It is about how long do we need monetary policy to remain restrictive in order to get inflation back to 2% target
• Markets are a little bit ahead
• They have jumped to the end part i.e. „we are going to normalise quickly“, and I don’t see that
• Fed’s policy settings are now in a good place
• But you don’t want to inadvertently become more restrictive than what you think is appropriate

The full interview from the FT can be found here (may be gated). This echoes the comments from Williams on Friday. But it highlights a failure in communication by the Fed somewhat, in having to walk back Powell’s press conference last week.

This article was written by Justin Low at www.forexlive.com.