Minneapolis Fed President Neil Kashkari told Bloomberg that he was “happy to see” the reaction to Jerome Powell’s speech at the Fed’s annual retreat in Jackson Hole, in an interview on Bloomberg’s Odd Lots podcast. That reaction was a steep market drop in the wake of the speech, indicating investors are starting to comprehend the Fed’s battle to get inflation back to 2%.

In the speech, Powell reiterated the Fed’s commitment to combatting inflation, even if it means putting the squeeze on businesses and households. The market reacted swiftly, with the S&P 500 closing 3.4% lower on Friday. That was in contrast to the 17% stock rally earlier in the summer, which Kashkari said was a sign of the disconnect between the central bank’s intentions and investors’ perceptions. “…I know how committed we all are to getting inflation down,” Kashkari told Bloomberg. “And I somehow think the markets were misunderstanding that.” He believes the market was too quick to price in shifts in Fed policy that the central bank didn’t intend to make. Kashkari also warned that if the Fed eases up too soon, inflation could flare back up, as it did in the 1970s, when the central bank back off too soon. It would be better to risk the Fed lagging behind the curve on the way down, he added in the interview.

Previously dovish, Kashkari has made a hawkish pivot, stating recently that he supports raising interest rates to 3.9% by the end of 2022 and to 4.4% by the end of next year. But he also pointed out that this year’s inflation is being driven by supply chain issues, the ongoing war in Ukraine, and too much stimulus poured into the economy during the pandemic. That makes it different than any other inflationary period that’s come before, which means it’s hard to say just how much pain households and businesses are in for before things start to ease.