All (remains) quite on the inflation front

Nonetheless, it seems everything is supportive of the Fed´s rate hikes:

U.S. consumer spending rose in April by the most in five months and inflation held at the Federal Reserve’s target, adding to signs of solid economic growth that support the central bank’s plan for gradual interest-rate hikes.

The chart indicates that there was nothing exceptional about consumption growth in April. Year-on-year, consumption growth has been quite stable, but low when compared to growth from 1990 to 2007.

To say it “adds to signs of solid economic growth” is a fantasy!

Or:

Inflation remained at the Federal Reserve’s target in April for a second straight month, a sign of firming prices in the U.S. economy that underscores policy makers’ plans to gradually raise interest rates.

Meanwhile, inflation remains subdued. While the headline PCE moves according to oil prices, core PCE has been low & stable, averaging 1.56% over the last four-plus years.

The Fed, however, insists in following labor market indicators, in particular the rate of unemployment. With unemployment below 4% and significantly below their estimate of “full employment”, they tremble!

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