The Fed continues to raise rates with little impact so far on inflation. How long will this last? Nightly reports 👇
) rising faster than expected despite multiple rate hikes that now total 3 percent on the year, though the last one came in September so would not have impacted today’s number.is the Fed’s preferred metric for showing what prices are really doing across the economy. And at least through August what theyThe figure jumped 0.6 for the month in August after being flat in July. And it rose to 4.9 percent over the same time last year, higher than the Wall Street consensus of 4.
All of this means that while Fed hikes have driven up mortgage rates and slowed the housing sector they have yet to cool overall consumer demand or spending in a way that would bring inflation back to the central bank’s target of around 2 percent per year.The central bank is expected to keep hiking through this year and next. And it won’t stop until core inflation relents., either from a White House worried about the midterms and 2024 or Democrats more broadly beyond comments from Sen.
that the Fed could be going too far. After all, inflation expectations are pretty well in check, unlike the last bout of hyper-inflation in the late 1970s and early 1980s.on prices show many of them coming down. Fed policy operates with a famous lag, meaning they could be tipping us toward recession now but we won’t know it for months when the increased cost of credit stalls business and consumer spending and the hot jobs market finally stalls out..
The Fed is obviously watching all this very closely. But for the moment, Powell and his colleagues have no plans to ease up on rate hikes until they see real, sustained movement down in the above-discussed core PCE, even if it means a painful recession that costs Democrats in the next couple elections. Because their biggest fear is sustained and potentially out-of-control inflation.