In monetary policy speak, the comments would be called “hawkish”, focused on reducing inflation using aggressive interest rates rises.

Managing inflation using interest rates is a balancing act for all central banks and one that is often not well executed by many jurisdictions including the Fed and Australia’s Reserve Bank.

Whether the tough talking from central banks will result in a genuine change in market-think remains to be seen.

It’s akin to riding the clutch on the steep hill – surgical precision is required but using a blunt instrument. National Australia Bank chief executive Ross McEwan likens it to landing a helicopter on a pin.

When the Fed indicated in its monetary policy statement last week that it could ease the pace of future rate rises, it was fully aware that this could add fuel to markets.

Waller said the Fed knew it would be challenging to signal a slowdown in the pace of rises because the minute we say you’re slowing, the markets will “jump for joy”.

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Waller’s is trying to dial it back a little just as Fed chairman Jerome Powell did at a press conference last week. He impressed on the UBS audience that the CPI read from last week was only one data point and not yet a sustained trend. And issued something of a mea culpa, reflecting on the fact that the Fed had previously fallen foul of false data dawns.

The most recent was in 2021 when inflation began to come down then suddenly took off again, leaving the central bank “flat-footed” and in need of an urgent pivot on rates.

This time around, the Fed is attempting to convey to the markets that they should be less concerned with how small the rate rises will be and more concerned about where the finish line is.

In other words, if the US central bank increases rates in smaller increments, it may do so for longer.

It makes sense given lesser-sized moves allows the Fed more flexibility and agility. The Reserve Bank also began to taper its interest rate rises in recent months, but it was similarly strident about the need to do whatever it takes to get inflation under control.

But whether the tough talking from central banks will result in a genuine change in market-think remains to be seen.

The softer-than-expected inflation figure out of the US has raised the pulse for investors that have been sitting on the sidelines, waiting for any sign that it’s time to get back into equities – particularly the growth stocks that delivered them huge returns over more than five years until 2022.

They read the latest inflation figures as a turning point and the hawkish comments by the Fed as its desire to see an orderly market.

“We’re going to need to see a continued run of this kind of behaviour and inflation slowly starting to come down, before we really start thinking about taking our foot off the brakes here,” says Waller.

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