New York Federal Reserve Bank President John Williams said that the Fed will need to purposely overshoot on its 2% inflation target temporarily to make up for periods when inflation is lower than desired, and it will need to be flexible in its approach.

"We need to make sure that we’re purposely overshooting that moderately for some time to get that balance," Williams told reporters.

"To me, success is not some arithmetic or some formula but it’s really this notion of inflation expectations, how people think about what’s inflation going to be in the future."

Market implications

The headline is bearish for the greenback that is currently unwinding a good majority of its recent rally in what could be the 4th wave of a 5-wave uptrend: