Zoltan stepping outside his comfort zone
“Don’t envy the Fed: the inflation picture is complex. Goods prices were a steady source of disinflation for the past 2 decades, which gave Fed precious time & cover to figure out what to do with policy rates to control services inflation
“Don’t envy the Fed: the inflation picture is complex. Goods prices were a steady source of disinflation for the past 2 decades, which gave Fed precious time & cover to figure out what to do with policy rates to control services inflation
Not today. Goods inflation is now a tailwind, not a headwind. Your correspondent is no expert on goods price inflation, but he reads the papers enough to sense that with supply chain & distribution bottlenecks everywhere, goods inflation won’t disappear (slow maybe; disappear no)
What used to give the Fed cover now exposes it: goods price inflation is a problem now, and at the same time services inflation is an issue too. There is no cover; “we need to fix this yesterday”.
The leadership of the FOMC knows what they can and cannot control…
The leadership of the FOMC knows what they can and cannot control…
They understand that they’ve no control over goods prices unless they curb demand through a recession –which given their updated mandate isn’t an option.
But they also know that they’ve a lot of control over services inflation,which, unlike goods, is mainly a function of domestic nominal factors….”
Extraordinary to see the maestro of the plumbing of the financial system speak out on inflation & conclude house prices must fall!
Extraordinary to see the maestro of the plumbing of the financial system speak out on inflation & conclude house prices must fall!
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