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Greg Gibbs, analyst at Amplifying Global FX Capital, points out that the recent comments by prominent Fed members, suggests that the Fed is considering moving to a framework where it targets inflation averaging around its 2% inflation target; requiring periods of above-target inflation to compensate for periods of below-target inflation.  

Key Quotes

“This would suggest a shift towards a more dovish Fed than has been experienced over recent years.”

“The Fed is embarking on a comprehensive review of its policy framework this year, and these comments suggest that the Fed is relatively close to implementing a policy of targeting a period of above 2% inflation to compensate for the recent history of sustained below 2% inflation.”

“The comments increase the probability that rates in the US have peaked and, in general, lower rate expectations moving forward.”