Perhaps Alf is being too harsh here.
I thought JPow was pretty clear that there would be a few 0.50 rate hikes followed by 0.25 ones. 0.75 is off the table, unless something crazy happens.
Sure, 2Y bond yields went down ~0.15% as a result, but we probably have to wait a few days to see if this is the start of a trend. And if it seems like it is one… they’ll just send Bullard out again, spitting fire and brimstone.
As long as the Fed stays this course they had laid out before, the markets should stay somewhat depressed. So there doesn’t seem to be a reason to double down on the negative rhetoric, especially if they don’t mean to follow through with it.
The Fed realized a while back that they could adjust financial situations using their words as much as by their actions. Hence, the good-cop bad-copping routine with words as much as they are tweaking the interest rates.
They also probably don’t feel like overdoing the bad cop routine as there are perils to hiking too fast - credit markets can choke. Then we’ll have a real problem on our hands. Yields rising too fast can also cause Japanese and European investors to pile in on the carry trade, effectively nullifying the move.
What can change this in the near term is, as you note, the CPI print and perhaps the PPI print. If April CPI is about the same level or below March, the Fed can stay the course. If it is higher again, then the Fed will have to crank up the tough talk again.