• I’m more cautious about inflation given the lack of progress
• Concern growing about recent increase in inflation expectations
• Expectations surveys are imperfect but recent sharp rise means the Fed cannot let its guard down
• Uncertainty might also weigh on growth
• Focus should remain on inflation to protect the Fed’s credibility
• Preference is to keep shrinking balance sheet as much as possible
• May need to rethink the concept of core inflation given that once-volatile food prices now behave more like other goods

The full text of the speech isn’t out on the KC Fed website yet but I’m curious to read more of his thoughts about food inflation, as that’s one I haven’t heard before.

More notably, this is the first sign of a bigger shift around inflation expectations. That’s a kind of second-round effect on tariffs that will get the Fed’s attention, and it was in both the UMich and Consumer Confidence surveys.