Fed Chair Janet Yellen may be on her way out, but she still has her say and her words may also reflect the thoughts of her successor Jerome Powell. Speaking in New York, Yellen said that inflation may NOT be transitory.

This is yet another gradual change in her approach. Earlier in the year, she did insist it was transitory and even pinned a few specific items such as prescription drugs and wireless charges.

She then described the absence of inflation as a “mystery“. This was followed by stating that inflation is “soft” in the most recent rate statement.

And now she made her starkest statement yet: inflation is surprisingly low and the Fed is not certain that it is transitory. She added that the Fed is “keeping an open mind” that it may be long-lasting.

She still believes that inflation will move up over the next year or two, but she says once again, she is uncertain. This is perplexing as the unemployment rate is very low at 4.1%, which is “at or below” the goal according to Yellen. The old models do not seem to work.

FOMC minutes later today

The Fed will release the minutes from the most recent meeting held on November 1st. It is important to stress that this document is not stale. Fed officials revise and edit the document until the last moment, aware of its potential impact on markets.

Will the Fed minutes reflect Yellen’s growing concerns about inflation? If so, many will doubt the path for rate hikes in 2018 even if they take a December hike for granted. This may hurt the dollar.

In any case, the dollar is already slightly lower on the day. USD/JPY stands out with a drop of 40 pips to 1.12 but also the euro and the pound are gaining against the greenback.