…
Across affluent countries, central bankers are sharply lifting inflation forecasts, penciling in further interest-rate increases and warning investors that interest rates will stay high for some time. Some have set aside plans to keep interest rates on hold.
The Federal Reserve last week held interest rates steady but signaled two more increases this year, which would lift U.S. rates to a 22-year high. Price inflation in core services excluding housing, a closely watched gauge of underlying price pressures, “remains elevated and has not shown signs of easing,” the Fed wrote in its semiannual monetary policy report last week…
For now, investors appear to doubt the hawkish tone emanating from central banks. Stock markets are resilient on both sides of the Atlantic, and investors are pricing in interest-rate cuts in the U.S. and Europe next year. That may be a mistake… [end quote]
The markets have already been through ups and downs caused by speculators being shocked that the Fed raised rates as it clearly warned ahead of time.
The Fed’s “Sticky Inflation” gauge has dropped a little but it’s still 6%. The Sticky Price Consumer Price Index (CPI) is calculated from a subset of goods and services included in the CPI that change price relatively infrequently. Median inflation is also high. According to research from the Cleveland Fed, the Median CPI provides a better signal of the inflation trend than either the all-items CPI or the CPI excluding food and energy. According to newer research done at the Cleveland Fed, the Median CPI is even better at PCE inflation in the near and longer term than the core PCE.
As long as these measures of inflation, as well as the Fed’s better-known core PCE inflation index, are higher than the target, the Fed will continue to raise the fed funds rate (though perhaps with “skips” as in June).
The worst inflation in 40 years has been quite the ride for consumers over the last two years, and recently, it’s even helped the unthinkable become increasingly mainstream. Some economists are asking: Are consumers actually getting ripped off? This once fringe economic hypothesis has captured headlines more and more this year amid persistent inflation, even if it usually goes by another name. After years of being labeled a conspiracy theory, some economists believe that “greedflation” or, to put it the way an early prognosticator defined it: “profit-led inflation,” is to blame for at least part of the recent rise in consumer prices.
The theory that corporations used the war and pandemic as an excuse to hike their profit margins, for a time supported only by progressive economists, has gained backing from the likes of Lael Brainard, a former Fed vice chair and the current director of Joe Biden’s National Economic Council, and Albert Edwards, a global strategist at the French investment bank Société Générale.
The “JCs” want more money. Nothing has changed in forty years.
Around 82, the pump seal company was receiving entreaties from their customers “please hold prices”. The company increased prices anyway (while cutting employee pay at the same time) insisting the price increases were justified. Their order book collapsed.
@Leap1 c’mon, we’re just yanking your chain. {LOL!}
That being said, it’s a general rule to define all acronyms by typing the complete name the first time it’s used. Especially ones with more than one meaning.
Wendy
