In the second half of last year, major central banks established a clear benchmark around the outlook for interest rates.

In a nutshell; they aren’t going up — not just until inflation begins to rise, but until it rises sustainably and stays higher.

The RBA has been explicit in its guidance that rates are set to stay at rock bottom for “at least three years“.

When it comes to rates market speculation, analysing the language of central bankers for clues as to possible changes in their thinking has become something of a fine art.

So there was some chatter earlier this week when Raphael Bostic, a committee member of the US Federal Reserve, said interest rate hikes could start happening as soon as the middle of next year.

Those comments were well outside the Fed’s consensus view, which is for rates to stay on hold through the end of 2023.

Also of note in bond markets is that benchmark US 10-year bond yields have recently climbed above one per cent for the first time since March 2020.

So the spotlight was shining brighter than usual on US Fed Chair Jerome Powell on Thursday Night (Australian time) when he provided an update of his own on the Fed’s outlook.

And he took the opportunity to offer some more equivocal comments on rate changes; “no time soon”.

Powell added that “now is not the time” to be discussing an exit from the Fed’s asset-purchase programs and its emergency rates settings.

Powell said that when the time comes to tighten policy settings, the bank will clearly communicate its plans before actually doing anything.

So if that time is not now, when will the bank flag possible changes?

In his analysis of the recent commentary, University of Oregon economist and Fed Watcher Tim Duy said rather than analysing communications, the focus should be on the data.

In terms of setting monetary policy, Fed committee members will ultimately be beholden to data points which confirm the US economy is rebounding out of the COVID-19 pandemic.

For his part, Bostic reckons the 2021 data is going to be pretty good — and Duy agrees.

In addition, Duy said the reason Bostic’s comments got more traction this week could be they match “the growing sense among market participants that the year will be much stronger” than the current consensus view among Fed committee members.

But if rates hikes are going to happen in 2022, that means inflation growth will have to consolidate above the Fed’s 2pc target by the first half of next year.

To Duy, “that seems premature. Possible, but premature.”

The bottom line for now is that the Fed is on “auto-pilot”, Duy said.

However, Bostic’s ruminations about possible tightening are “a preview of what’s to come if his optimistic forecast comes to pass”.