Inflation Pressures Ease in US, But Some Call for Fed to Give Up on 2% Target
TL;DR Summary
Some voices are calling for the Fed to abandon its 2% inflation target and accept 4%-5% core PCE inflation as the new normal. However, if the Fed were to do so, short-term rates would stay high, long-term yields would explode, and mortgage rates would blow out, leading to lower asset prices. The entire market psychology is based on the hope that inflation will be back at 2% by the end of this year or no later than the end of next year, and if the Fed were to abandon its fight with inflation, it would be a rude awakening for markets betting on 2% inflation.
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- Inflation is expected to fall but Bank of England’s rate call is finely balanced The Guardian
- Labor Department Reports Inflation Fell in March – The Presidential Prayer Team The Presidential Prayer Team
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