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The Federal Reserve might need to take more aggressive action if inflation rises rapidly rather than gradually, Dallas Federal Reserve President Robert Kaplan argued on Tuesday, as reported by Reuters.

Additional takeaways

“Banks have made it through this shock by and large; may need some reforms to keep financial markets from seizing up as they did in March.”

“Climate change is already a key factor in base case forecasts; will have more tail events.”

“The Fed used to try to preempt inflation by raising rates; now see benefits of running economy hotter.”

Market reaction

The US Dollar Index largely ignored these remarks and continues to move sideways around 92.80.