Saturday, October 15, 2022

US core inflation remains elevated

Until core inflation (which excludes the direct impact of oil and food prices) falls back to its 2 percent target, the Fed is unlikely to stop raising rates.  The core inflation rate must be lower on a sustained basis before the Fed will relax its vigilance.  Unfortunately, to reduce inflation, they need to reduce growth.  And this growth/inflation trade-off has worsened because of Covid's effect on supply chains and the labour force. 

Not good for asset prices, or for world growth.



No comments:

Post a Comment