Fed isn't in any position to combat inflation with an interest rate hike for possibly a year, given the need to taper $120 billion in monthly bond purchases...
U.S. inflation is showing signs of moderating, but not by enough to decisively settle the debate on whether the recent pace of price rises is transitory or not.
“One of our greatest concerns is for a stagflation-like environment, in which there’s weakening growth and higher-than-average inflation that the Fed can’t do much about,” said Alan McKnight, chief investment officer of Birmingham-based Regions Bank, which oversees more than $47 billion in assets. “It’s a non-base-case scenario, but that’s the risk out there.”
With each passing month, though, “there’s been a little bit more evidence that some components of inflation are poised to keep increasing and the risk factors have grown,” said Greg McBride, chief financial analyst for Bankrate.com, an online provider of rates information. “The reality of it is that it’s going to be early 2022 before we know definitively whether price pressures are transitory. And at that point, the Fed is behind the curve.
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