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ORLANDO, Florida - Central bankers choose their words carefully, so recent comments from the Federal Reserve's two most senior policymakers that U.S. monetary policy could stay"restrictive" rather than"higher" for longer should not be overlooked.
The distinction is important, and barring a shock surge in inflation or un-mooring of inflation expectations, offers perhaps the most cogent case why the Fed will not raise rates. That's territory Powell and colleagues will want to avoid - saying policy may stay restrictive for longer rather than the nominal policy rate being higher for longer gives the Fed more wiggle room.
Inflation expectations, as measured by surveys of consumers or the breakeven rates implied in inflation-protected bonds, are probably pointing higher on aggregate, but are by no means taking off.
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