Market correctly interprets Fed's commitment to 2% inflation target despite communication issues

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The market has correctly interpreted the Fed's reaction function, which indicates that financial conditions are not tight enough and that more progress is needed to reach the 2% inflation target, despite recent lower inflation reports. This suggests a high probability of further rate hikes, and the market now expects a recommitment to price stability, even after previous communication missteps between the June and July meetings regarding financial conditions.