Florian Ielpo, head of macro at Lombard Odier, says market moves reflect a
re-pricing of the Fed’s credibility and independence. He says inf has clearly
returned to the center of the Fed’s reaction function and that policymakers are
steering accordingly, reinforcing a higher-for-longer profile for real rates. He
adds the Fed has adjusted its tone: communications are crisper and more
directive, dissenting language has been dropped — much previous wording has been
discarded and this should be seen as a small monetary policy revolution.
