FOMC Chairman Powell answers a reporter’s question at the press conference.
Inflation? Yes it’s a thing. Anyone living in the real world recognizes it at the grocery store, in the real estate section of their local newspaper, and the stock market for that matter. Those in retirement trying to live off of their portfolio are paying the price for a reckless monetary policy. Rates need to be higher pronto.
The editors of The Wall Street Journal write:
Investors briefly bid up the 10-year Treasury yield above 3% on the news before it fell back to 2.97%. But forward guidance has always seemed overrated as a policy tool, and with growth picking up it was becoming a threat to the Fed’s credibility going forward.
All the more so with Wednesday’s report that producer prices rose 0.5% in May, putting them up 3.1% for the last 12 months. The biggest lift was from oil prices, but the increase was 0.3% even without food and energy, or 2.4% in the last year. That’s above the Fed’s inflation target of 2%. Inflation is clearly on the rise, and the Fed has to be alert that it doesn’t let expectations of price increases insinuate themselves into business decisions. Then the FOMC may want to start smoking something to forget the risks it might pose to what for now is an excellent economic outlook.
Read more here.