Prof G Markets · Thursday, September 17, 2026
Robert Armstrong noted that the Fed chair is developing a consistent communication strategy, using the mantra: 'We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed.' This phrase, used previously and again in recent remarks, outlines the Fed's reaction function for monetary policy decisions.
“And we have a mantra now. And the mantra is this: We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed.”
“That's the phrase he used in Wyoming, that's the phrase he used today. And what he is doing there is describing the Fed's reaction function. He's telling the world, this is the test we apply to see whether monetary policy is where it needs to be.”
“Are we at target? Target is 2% PCE. Are we moving to it fast enough? If the answer is no, we're going to tighten policy. That's a reasonably clear statement of the Fed's reaction function.”