Fed's in tough bind now after latest comments, says former vice chairman Roger Ferguson

Fed Policy & Market Reaction - The market reacted strongly to comments from a Fed president, interpreting them as a signal of a potential shift in monetary policy [2] - The market's interpretation puts the Fed in a difficult position, risking market disappointment if it doesn't follow through [4] - A former Fed vice chair expresses concern that one speech significantly altered market expectations [3] Inflation Concerns - Inflation has been running significantly above the 2% target, around 2.9% to 3% [5] - There's a risk that the market may perceive the Fed's actual inflation target to be higher than 2%, potentially around 2.5% to 3% [8] - Maintaining short-term credibility regarding inflation should be a priority [8] - In the absence of clear inflation data, caution is advised to avoid difficulty in controlling inflation later [9] Monetary Policy Stance - A former Fed vice chair aligns with those advocating for a more cautious approach regarding potential policy easing in December [6] - The argument for needing monetary policy assistance due to a weak labor market is not considered strong [6] - Delaying a meeting to wait for more data is not recommended, as it could create uncertainty and questions about the meeting schedule [10][11][12]