In both the United States and Europe, the words of central bankers led investors to cut their estimates of the peak or "terminal" rate expected in the current tightening cycle. With financial conditions loosening despite rising policy rates, "central banks must...be resolute in their fight against inflation and ensure policy remains appropriately tight long enough to durably bring inflation back to target," Adrian and others wrote. The European Central Bank seems furthest from a likely stopping point. Combined, the statements mark the start of the endgame for central banks that were slow to recognize the onset of inflation last year before engaging in a record-setting round of rate increases. Central bankers long ago stopped using the word "transitory" in reference to inflation that proved faster and more persistent than any expected.

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