The Fed’s favorite inflation measure skyrockets as markets realize rate hikes are far from over
Tiana Lowe
The Federal Reserve‘s preferred measure of inflation, personal consumption expenditures price inflation, skyrocketed in January, defying President Joe Biden‘s lie that “inflation is coming down.” Both headline and core PCE prices rose by 0.6% last month, three times the amount headline PCE rose in December and twice that of core PCE. While core PCE rose 4.7% over the past 12 months — still more than twice the 2% inflation benchmark the Fed considers acceptable — January’s core PCE inflation was 7.1% on an annualized basis, a significant acceleration for an economy that’s supposed to be cooling down.
On the news that both core and headline inflation undoubtedly and markedly rose in January, investors, who have been stupidly and stubbornly beholden to the notion that the Fed would cut rates as early as this year, have now fully priced in another rate hike in June.
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And as I have written in detail here, we have all the reason to believe that the Fed will take monetary tightening even further.
Despite his profound error in financing reckless “pandemic” spending for two years, Jerome Powell considers himself an ideological successor to Paul Volcker, the great Fed Chair who killed the inflation created by the Great Society and Nixon blowing up Bretton Woods by pushing rates to 20%.
Even though Powell eased his foot on the brake earlier this month when the Fed passed a 25 basis point hike rather than a half-percentage point hike, that was before job gains, inflation prints, and specifically, service prices came in at rates way too hot for the Fed to handle without more substantial rate hikes.
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According to the last FOMC meeting minutes, multiple voting members wanted to raise rates by 50 basis points. With inflation rebounding, those members and more have every reason to push the pedal down and ramp up the rate hikes.
A final question for your consideration: as late as earlier this month, the same liars who claimed that inflation from 2021 and the start of 2022 was transitory were once again claiming that, actually, the speed with which inflation fell from its June apex proved that “Team Transitory” was actually right all along — will they finally apologize for lying (again)?