WASHINGTON, D.C. (CNN/Money) - Lurching from Fed testimony to Fed testimony, from inflation report to inflation report? Is that what we're in for this year?

Tuesday Big Fed Chief Alan Greenspan gave yet another rendition of what is now the Fed's mantra. The Fed expects to move rates at a "measured pace," meaning rate hikes that are smaller rather than larger and done more slowly than more quickly -- at least that's how it's interpreted. And he also said that even though unit labor costs have stopped declining, inflationary pressures are not a serious concern.

Taken with the May consumer price index, where the overall number soared at its fastest rate in 3-1/2 years, but the core rate (which excludes food and energy prices) was up only 0.2%, this led Wall Street to quickly conclude that the Fed will NOT have to be aggressive in raising rates. Stocks rallied, and the bond market went crazy, pushing yields down sharply.

This comes shortly after these same markets wilted after Greenspan and a few Fed bank presidents made it clear last week that IF they are wrong about inflation and it heats up too much they could be more aggressive.

In effect, the Fed has one message, albeit one that has been shaded to signal to the markets that officials are not asleep at the switch and not about to get behind the curve in fighting inflation. And in the end, it seems that the story is the same as it always is -- the Fed is watching the numbers, watching the economy and that will determine how it pulls the policy switches.

Meanwhile, it looks like markets are doing the same thing, rallying when the numbers look good, (i.e. slower growth and lower inflation) and selling off when they look good,( i.e. faster growth and faster inflation). Got that?

Much more important in the long term is whether or not the Fed is getting it right. Patience will be a virtue if they don't pull the trigger too quickly on inflation and allow the economy to keep recovering. But it will be a mistake if the inflation genie is able to wriggle out of the bottle again.  

Kathleen Hays anchors CNN Money Morning and The FlipSide, airing Monday to Friday on CNNfn. As part of CNN's Business News team, she also contributes to Lou Dobbs Tonight.