Markets are pricing in a 27% chance that the Fed only does 50 basis points, so she might consider being careful here. And a big reason  the market is pricing that in is because that’s what the Fed guided. You can’t tell the market what you’re going to do and then say you’re only doing it because that’s what the market has priced.

In another sign of the mess the Fed finds itself in, Daly cited the UMich inflation expectations survey for the 75 bps hike rather than 50. Today that number was revised back down. She acknowledged that today, saying the revision ‚got my attention‘ while still saying that long-term inflation expectations have ‚ticked up‘.

She also laid out a strategy, saying that if they front load rate hikes they might not have to do as much. This commentary is a bit of a departure from the unrelenting hawkish talk lately.

This article was written by Adam Button at www.forexlive.com.