Fed Still Wants Rates to Be Primary Policy Tool, Natwest Markets Says

The transcript discusses the Federal Reserve's preference for using interest rates as the primary policy tool, despite showing flexibility with the balance sheet for technical reasons. It examines the perception of the Fed's actions as a capitulation and outlines the conditions, such as higher inflation, that might lead to future rate hikes. The discussion highlights the Fed's cautious approach in balancing economic growth and inflation control.

What is the primary policy tool that the Fed wants to use according to the text?

How does the speaker perceive the Fed's flexibility on the balance sheet?

What does the speaker mean by 'capitulation' in the context of Fed policy?

What factors does the speaker believe would lead the Fed to hike rates?

What is the significance of inflation in the Fed's decision-making process according to the speaker?