Fed Rhetoric, Fed Action Don't Necessarily Match

Forex News "Fed rhetoric, in particular from the various bank presidents, has strongly suggested that a reversal in monetary policy accommodation is likely to occur sooner rather than later," Deutsche Bank says. Easy monetary policy may worsen the inflation outlook, but the problem is "that financial market conditions are not accommodative and that is ultimately what matters, more so than where real fed funds are," firm says. "Hence we believe that higher interest rates would only exacerbate the deep recession in housing and the ongoing massive contraction in financial institution balance sheets," so "Fed tightening may be further away than some envision."