REUTERS
"Fed's Evans: 'Let's be patient' on U.S. inflation"
By Ann Saphir
SEPTEMBER 30, 2021
(Reuters) -Chicago Federal Reserve Bank President Charles Evans on Thursday said he believes that the supply shocks that are pushing up on prices now will ease next year, and low interest rates will still be needed to bring U.S. inflation back durably to 2%.
“Let’s be patient and not declare victory on inflation,” Evans said in an online webinar with Princeton University’s Bendheim Center for Finance.
Inflation, he said, will likely fall back to around 2.1% next year and could rise to 2.4% in 2023 as the Fed begins what he anticipates will be a very gradual pace of interest rate increases.
If inflation does rise above that level, he said, he would want to tighten policy more quickly, but that’s not his expectation.
His read on a wide range of measures of inflation expectations does not suggest recent high inflation readings are getting entrenched into the long-term trajectory for U.S. prices.
Inflation expectations “are not getting out of hand,” Evans said, adding that his worry continues to be whether even now they are high enough to be consistent with the Fed’s 2% target.
“We’ve underrun our 2% inflation expectation almost since we announced it in 2012.”
Reporting by Ann Saphir; Editing by Andrea Ricci
https://www.reuters.com/article/usa-fed ... SL1N2QW2BN
THE FEDERAL RESERVE
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Mester repeats first rate hike could come at the end of 2022"
By Reuters Staff
OCTOBER 1, 2021
NEW YORK (Reuters) - The Federal Reserve’s conditions for raising interest rates could be met by the end of 2022, Cleveland Fed Bank President Loretta Mester said on Friday, adding that she expects inflation to come back down to the central bank’s target next year.
“I think we’ll see progress in the labor market and progress on inflation coming back down,” Mester said during a virtual panel organized by the Shadow Open Market Committee, repeating an outlook she shared last week.
Mester said she expects inflation will start to come back down once supply side and pent-up demand factors ease, forecasting inflation will be above 2% in 2022 and 2023.
Projections the Fed released after its September meeting here showed that policymakers are evenly split on when they expect rates to increase, with nine of the 18 Fed officials projecting they may need to start raising rates in 2022.
Mester said she expects inflation expectations to remain well anchored, but that officials may need to respond if inflation stayed elevated and medium to long-term inflation expectations continued to rise.
Mester will have a vote on the Fed’s policy-setting committee in 2022.
Reporting by Jonnelle Marte; Editing by Andrea Ricci
https://www.reuters.com/article/usa-fed ... SL1N2QX1T2
"Fed's Mester repeats first rate hike could come at the end of 2022"
By Reuters Staff
OCTOBER 1, 2021
NEW YORK (Reuters) - The Federal Reserve’s conditions for raising interest rates could be met by the end of 2022, Cleveland Fed Bank President Loretta Mester said on Friday, adding that she expects inflation to come back down to the central bank’s target next year.
“I think we’ll see progress in the labor market and progress on inflation coming back down,” Mester said during a virtual panel organized by the Shadow Open Market Committee, repeating an outlook she shared last week.
Mester said she expects inflation will start to come back down once supply side and pent-up demand factors ease, forecasting inflation will be above 2% in 2022 and 2023.
Projections the Fed released after its September meeting here showed that policymakers are evenly split on when they expect rates to increase, with nine of the 18 Fed officials projecting they may need to start raising rates in 2022.
Mester said she expects inflation expectations to remain well anchored, but that officials may need to respond if inflation stayed elevated and medium to long-term inflation expectations continued to rise.
Mester will have a vote on the Fed’s policy-setting committee in 2022.
Reporting by Jonnelle Marte; Editing by Andrea Ricci
https://www.reuters.com/article/usa-fed ... SL1N2QX1T2
Re: THE FEDERAL RESERVE
REUTERS
"EXCLUSIVE Fed's Harker says economy close to achieving inflation goal for rate hikes"
By Jonnelle Marte
October 1, 2021
Oct 1 (Reuters) - The U.S. Federal Reserve may be close to meeting the inflation mandate set for raising interest rates, Philadelphia Fed Bank President Patrick Harker said, but it may be a year or longer before the central bank's employment goal is met to allow for an actual rate increase.
After running high this year because of the pandemic, inflation is likely to come down closer to the Fed's 2% target over the next couple of years, Harker said in an interview with Reuters on Thursday.
"We'll see how it pans out over the next couple of months, but I think we're pretty close to, or already have, achieved our inflation goal of running, averaging above 2% for a while so we can average over the longer-run 2% inflation," Harker said.
If the economy continues to improve as expected, it could potentially reach a point as soon as 2023 where the Fed's mandates for both inflation and maximum employment have been met, he said.
His forecast is for the U.S. unemployment rate to drop to about 4% by the end of next year, 3.8% by 2023 and 3.6% by the end of 2024.
"At that point I think the economy should be healthy enough to tolerate some small increases in the Fed funds rate," said Harker, adding that low interest rates can increase financial stability risks and hurt savers and people on fixed incomes.
But he emphasized that the central bank will not be removing accommodation anytime soon.
The Fed will still be adding accommodation even after it starts to reduce its bond purchases from the current pace of $120 billion a month, just at a slower rate, Harker said.
Winding down those asset purchases soon could give the Fed more "optionality" next year for responding to inflation that continues to run above the central bank's target, Harker said.
"That is a risk worth monitoring," he said, especially if some supply side disruptions take a few years to be resolved.
Harker said earlier this week that he supports tapering the Fed's asset purchases as soon as November.
He also said the central bank could start increasing interest rates in late 2022 or early 2023, based on how the economy is doing.
ETHICS REVIEW 'APPROPRIATE'
Harker may vote next year as an alternate in the Fed's monetary policy meetings until a replacement is chosen for Boston Fed President Eric Rosengren, who announced his retirement earlier this week, as did Dallas Fed President Robert Kaplan.
Rosengren cited health reasons for his decision but both he and Kaplan were facing questions about investment trades they made in 2020 while the Fed took actions to stabilize financial markets and the economy.
Fed Chair Jerome Powell ordered a broad review of the central bank's guidelines and vowed to improve them.
He also said this week that the Fed is examining the trading done by regional bank presidents to make sure it was legal and in line with current policies.
Harker said he welcomes the review of the ethics rules, calling it "timely and appropriate."
Harker said a look at his own investments from last year made him think about whether it may be time to update the rules.
Some municipal bonds that he owned for years were called because of the drop in interest rates, meaning he was paid back before the bonds matured.
"In my mind it raised the question 'should I own municipal bonds going forward?'" said Harker.
"This is why I think this is important, I hadn't thought about that before."
Powell shared a similar concern after last week's policy meeting, saying that he asked the ethics office to review his municipal investments to confirm that they did not create a conflict and that he and his wife will not trade on those holdings.
"We serve the American people and the American people need to trust that we are objective and have their best interests at heart," said Harker, who was tapped to run the Philadelphia Fed in 2015.
"That said, if there are things that would bring that into question, including our investments, then we should strengthen those policies."
Reporting by Jonnelle Marte; Edited by Dan Burns and Andrea Ricci
https://www.reuters.com/business/financ ... 021-10-01/
"EXCLUSIVE Fed's Harker says economy close to achieving inflation goal for rate hikes"
By Jonnelle Marte
October 1, 2021
Oct 1 (Reuters) - The U.S. Federal Reserve may be close to meeting the inflation mandate set for raising interest rates, Philadelphia Fed Bank President Patrick Harker said, but it may be a year or longer before the central bank's employment goal is met to allow for an actual rate increase.
After running high this year because of the pandemic, inflation is likely to come down closer to the Fed's 2% target over the next couple of years, Harker said in an interview with Reuters on Thursday.
"We'll see how it pans out over the next couple of months, but I think we're pretty close to, or already have, achieved our inflation goal of running, averaging above 2% for a while so we can average over the longer-run 2% inflation," Harker said.
If the economy continues to improve as expected, it could potentially reach a point as soon as 2023 where the Fed's mandates for both inflation and maximum employment have been met, he said.
His forecast is for the U.S. unemployment rate to drop to about 4% by the end of next year, 3.8% by 2023 and 3.6% by the end of 2024.
"At that point I think the economy should be healthy enough to tolerate some small increases in the Fed funds rate," said Harker, adding that low interest rates can increase financial stability risks and hurt savers and people on fixed incomes.
But he emphasized that the central bank will not be removing accommodation anytime soon.
The Fed will still be adding accommodation even after it starts to reduce its bond purchases from the current pace of $120 billion a month, just at a slower rate, Harker said.
Winding down those asset purchases soon could give the Fed more "optionality" next year for responding to inflation that continues to run above the central bank's target, Harker said.
"That is a risk worth monitoring," he said, especially if some supply side disruptions take a few years to be resolved.
Harker said earlier this week that he supports tapering the Fed's asset purchases as soon as November.
He also said the central bank could start increasing interest rates in late 2022 or early 2023, based on how the economy is doing.
ETHICS REVIEW 'APPROPRIATE'
Harker may vote next year as an alternate in the Fed's monetary policy meetings until a replacement is chosen for Boston Fed President Eric Rosengren, who announced his retirement earlier this week, as did Dallas Fed President Robert Kaplan.
Rosengren cited health reasons for his decision but both he and Kaplan were facing questions about investment trades they made in 2020 while the Fed took actions to stabilize financial markets and the economy.
Fed Chair Jerome Powell ordered a broad review of the central bank's guidelines and vowed to improve them.
He also said this week that the Fed is examining the trading done by regional bank presidents to make sure it was legal and in line with current policies.
Harker said he welcomes the review of the ethics rules, calling it "timely and appropriate."
Harker said a look at his own investments from last year made him think about whether it may be time to update the rules.
Some municipal bonds that he owned for years were called because of the drop in interest rates, meaning he was paid back before the bonds matured.
"In my mind it raised the question 'should I own municipal bonds going forward?'" said Harker.
"This is why I think this is important, I hadn't thought about that before."
Powell shared a similar concern after last week's policy meeting, saying that he asked the ethics office to review his municipal investments to confirm that they did not create a conflict and that he and his wife will not trade on those holdings.
"We serve the American people and the American people need to trust that we are objective and have their best interests at heart," said Harker, who was tapped to run the Philadelphia Fed in 2015.
"That said, if there are things that would bring that into question, including our investments, then we should strengthen those policies."
Reporting by Jonnelle Marte; Edited by Dan Burns and Andrea Ricci
https://www.reuters.com/business/financ ... 021-10-01/
Re: THE FEDERAL RESERVE
CNBC
"Fed’s Evans sees inflation falling below central bank’s 2% target after current rise subsides"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, OCT 5 2021
KEY POINTS
* Chicago Fed President Charles Evans told CNBC on Tuesday that the current spate of inflation won’t last and ultimately will fall below the central bank’s target.
* Inflation has been at 3.6% year over year in the past couple of months, the highest since the early 1990s, according to the Fed’s preferred gauge.
The current spate of inflation won’t last and ultimately will fall below the Federal Reserve’s target, Chicago Fed President Charles Evans said Tuesday.
While inflation by some measures is running at a 30-year high, Evans told CNBC the supply chain bottlenecks and other issues will subside and price pressures will fade.
“I’m comfortable in thinking that these are elevated prices, that they will be coming down as supply bottlenecks are addressed,” he told CNBC’s Steve Liesman during a “Squawk Box” interview.
“I think it could be longer than we were expecting, absolutely, there’s no doubt about it."
"But I think the continuing increase in these prices is unlikely.”
Inflation has been at 3.6% year over year in the past couple of months, the highest since the early 1990s, according to the Fed’s preferred gauge.
Other measures, such as the consumer price index, have inflation running even hotter.
Evans acknowledged that the trend is putting pressure on the economy.
“That definitely is a challenge for households and businesses."
"I mean, it cuts into income, wages."
"So that’s a problem."
"We’re definitely monitoring that,” he said.
“It’s really not a monetary policy issue, it’s an infrastructure supply issue at the moment."
"So I think inflation will be coming down, and I think once it’s come down, we’re still going to be in a low interest rate … world.”
Nevertheless, the Fed broadly has indicated that it has met the inflation part of its mandate, with the level running well above the 2% goal.
Consequently, the central bank is expected to begin slowly pulling back on the unprecedented support it has provided during the pandemic, starting with a tapering of monthly asset purchases.
However, interest rate increases are not expected to being until at least the end of 2022, according to current Federal Open Market Committee projections.
Market pricing sees the first hike coming either in November or December of next year, according to the CME’s FedWatch tool.
While Evans said he is on board with the tapering, he said the Fed soon will be facing the familiar change of keeping inflation elevated to healthy levels, and likely will have to keep rates low.
“It’s just putting challenges on getting monetary policy to produce sustainable inflation at and above 2% so that we can average 2% over time,” he said.
https://www.cnbc.com/2021/10/05/feds-ev ... sides.html
"Fed’s Evans sees inflation falling below central bank’s 2% target after current rise subsides"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, OCT 5 2021
KEY POINTS
* Chicago Fed President Charles Evans told CNBC on Tuesday that the current spate of inflation won’t last and ultimately will fall below the central bank’s target.
* Inflation has been at 3.6% year over year in the past couple of months, the highest since the early 1990s, according to the Fed’s preferred gauge.
The current spate of inflation won’t last and ultimately will fall below the Federal Reserve’s target, Chicago Fed President Charles Evans said Tuesday.
While inflation by some measures is running at a 30-year high, Evans told CNBC the supply chain bottlenecks and other issues will subside and price pressures will fade.
“I’m comfortable in thinking that these are elevated prices, that they will be coming down as supply bottlenecks are addressed,” he told CNBC’s Steve Liesman during a “Squawk Box” interview.
“I think it could be longer than we were expecting, absolutely, there’s no doubt about it."
"But I think the continuing increase in these prices is unlikely.”
Inflation has been at 3.6% year over year in the past couple of months, the highest since the early 1990s, according to the Fed’s preferred gauge.
Other measures, such as the consumer price index, have inflation running even hotter.
Evans acknowledged that the trend is putting pressure on the economy.
“That definitely is a challenge for households and businesses."
"I mean, it cuts into income, wages."
"So that’s a problem."
"We’re definitely monitoring that,” he said.
“It’s really not a monetary policy issue, it’s an infrastructure supply issue at the moment."
"So I think inflation will be coming down, and I think once it’s come down, we’re still going to be in a low interest rate … world.”
Nevertheless, the Fed broadly has indicated that it has met the inflation part of its mandate, with the level running well above the 2% goal.
Consequently, the central bank is expected to begin slowly pulling back on the unprecedented support it has provided during the pandemic, starting with a tapering of monthly asset purchases.
However, interest rate increases are not expected to being until at least the end of 2022, according to current Federal Open Market Committee projections.
Market pricing sees the first hike coming either in November or December of next year, according to the CME’s FedWatch tool.
While Evans said he is on board with the tapering, he said the Fed soon will be facing the familiar change of keeping inflation elevated to healthy levels, and likely will have to keep rates low.
“It’s just putting challenges on getting monetary policy to produce sustainable inflation at and above 2% so that we can average 2% over time,” he said.
https://www.cnbc.com/2021/10/05/feds-ev ... sides.html
Re: THE FEDERAL RESERVE
REUTERS
"Treasury's Yellen: Fed chief pick 'up to the president'"
By Reuters Staff
OCTOBER 5, 2021
(Reuters) - U.S. Treasury Secretary Janet Yellen on Tuesday declined to say whether she would support a reappointment of Federal Reserve Chair Jerome Powell for a second term, saying it was up to President Joe Biden to decide.
In an interview with CNBC, Yellen also said she trusts the U.S. central bank to make the right decisions in guiding the economy’s recovery from the recession caused by the coronavirus pandemic.
“Well, it’s up to the president to make the nomination and the president hasn’t yet made that decision,” Yellen said when asked if she supports a renomination of Powell.
“I know he will talk to many people and consider a wide range of evidence and opinions and make a very careful decision.”
In August, Bloomberg reported that Yellen had told senior White House advisers that she backs Powell for a second term.
First appointed as Fed chair by former President Donald Trump, Powell’s current term at the helm expires in February, and the Biden administration has not yet made an announcement.
Last week an influential voice of the Democratic Party’s progressive wing, Senator Elizabeth Warren of Massachusetts, publicly came out against a second term for Powell, calling him a “dangerous man” to lead the Fed.
On Tuesday she broadened her critique, faulting Powell not just for his track record on regulating banks, but also for his handling of potential ethical lapses by fellow Fed policymakers in their personal financial lives.
“We need changes at the Fed,” said Warren, who is on the Senate banking committee that oversees the central bank.
Two of the Fed system’s 12 regional reserve bank presidents traded securities actively in 2020 as the Fed was launching an unprecedented response to the pandemic’s threats to the economy.
Both officials have since announced their departures.
Powell has launched a sweeping ethics review of personal investments by top Fed officials and has asked the Fed’s internal watchdog to review all transactions by senior officials to ensure they were compliant with existing ethics rules and the law.
Asked about Warren’s comments, White House spokeswoman Karine Jean-Pierre told reporters aboard Air Force One as Biden traveled to Michigan on Tuesday: “Yes, he does have confidence in ... Powell at this time.”
TRUST THE FED
In the CNBC interview, Yellen was also asked if she thought the Fed had made the right decisions regarding the economy, especially given the unexpectedly high inflation this year that has a number of critics second-guessing its loose policy stance.
“I trust the Fed to make the right decisions,” said Yellen, who served one term as Fed chair immediately before Powell.
“You know we have been hit by an incredibly unusual shot."
"On the one hand, we’re all almost 6 million jobs short of where we weren’t before the pandemic, which means a lot of people who still need jobs."
"On the other hand, many firms are finding it difficult to hire,” she said.
“We’ve had extraordinary shifts in the pattern of demand ... and I know the Fed is trying to sort through the implications of that - supply bottlenecks have developed that have caused inflation."
"I believe that they’re transitory, but that doesn’t mean they’ll go away over the next several months.”
Reporting By Dan Burns; Additional reporting by Ann Saphir, Doina Chiacu and Jarrett Renshaw; Editing by Chizu Nomiyama and Bill Berkrot
https://www.reuters.com/article/usa-tre ... SL1N2R11IL
"Treasury's Yellen: Fed chief pick 'up to the president'"
By Reuters Staff
OCTOBER 5, 2021
(Reuters) - U.S. Treasury Secretary Janet Yellen on Tuesday declined to say whether she would support a reappointment of Federal Reserve Chair Jerome Powell for a second term, saying it was up to President Joe Biden to decide.
In an interview with CNBC, Yellen also said she trusts the U.S. central bank to make the right decisions in guiding the economy’s recovery from the recession caused by the coronavirus pandemic.
“Well, it’s up to the president to make the nomination and the president hasn’t yet made that decision,” Yellen said when asked if she supports a renomination of Powell.
“I know he will talk to many people and consider a wide range of evidence and opinions and make a very careful decision.”
In August, Bloomberg reported that Yellen had told senior White House advisers that she backs Powell for a second term.
First appointed as Fed chair by former President Donald Trump, Powell’s current term at the helm expires in February, and the Biden administration has not yet made an announcement.
Last week an influential voice of the Democratic Party’s progressive wing, Senator Elizabeth Warren of Massachusetts, publicly came out against a second term for Powell, calling him a “dangerous man” to lead the Fed.
On Tuesday she broadened her critique, faulting Powell not just for his track record on regulating banks, but also for his handling of potential ethical lapses by fellow Fed policymakers in their personal financial lives.
“We need changes at the Fed,” said Warren, who is on the Senate banking committee that oversees the central bank.
Two of the Fed system’s 12 regional reserve bank presidents traded securities actively in 2020 as the Fed was launching an unprecedented response to the pandemic’s threats to the economy.
Both officials have since announced their departures.
Powell has launched a sweeping ethics review of personal investments by top Fed officials and has asked the Fed’s internal watchdog to review all transactions by senior officials to ensure they were compliant with existing ethics rules and the law.
Asked about Warren’s comments, White House spokeswoman Karine Jean-Pierre told reporters aboard Air Force One as Biden traveled to Michigan on Tuesday: “Yes, he does have confidence in ... Powell at this time.”
TRUST THE FED
In the CNBC interview, Yellen was also asked if she thought the Fed had made the right decisions regarding the economy, especially given the unexpectedly high inflation this year that has a number of critics second-guessing its loose policy stance.
“I trust the Fed to make the right decisions,” said Yellen, who served one term as Fed chair immediately before Powell.
“You know we have been hit by an incredibly unusual shot."
"On the one hand, we’re all almost 6 million jobs short of where we weren’t before the pandemic, which means a lot of people who still need jobs."
"On the other hand, many firms are finding it difficult to hire,” she said.
“We’ve had extraordinary shifts in the pattern of demand ... and I know the Fed is trying to sort through the implications of that - supply bottlenecks have developed that have caused inflation."
"I believe that they’re transitory, but that doesn’t mean they’ll go away over the next several months.”
Reporting By Dan Burns; Additional reporting by Ann Saphir, Doina Chiacu and Jarrett Renshaw; Editing by Chizu Nomiyama and Bill Berkrot
https://www.reuters.com/article/usa-tre ... SL1N2R11IL
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Mester says U.S. inflation mostly driven by pandemic-related factors"
By Jonnelle Marte
OCTOBER 7, 2021
NEW YORK (Reuters) - Both supply-side and demand-side factors are contributing to U.S. inflation right now, but most of the current price changes may be driven by pandemic-related shifts that could subside over time, Cleveland Federal Reserve Bank President Loretta Mester said on Thursday.
Policymakers need to distinguish short-term inflationary pressures from inflation that could be longer lasting when determining how to respond, Mester said during a panel organized by the European Central Bank.
“How much of that increase is driven by supply shocks and how much of it is driven by demand that would respond to monetary policy?” Mester said.
An increase in medium- and long-term inflation expectations, paired with a continued rise in inflation, could be a sign that the price changes are being driven more by higher demand than policymakers anticipate, said Mester.
However, the Fed official, who will have a vote next year on the Fed’s policy-setting committee, said that is not her baseline forecast.
“Right now, my view is it’s pandemic related but we’ll have to wait and see,” said Mester.
Some of the supply-side challenges caused by the pandemic may take longer to be resolved than initially expected and policymakers will keep an eye on those upside risks to inflation, Mester said.
But there are consequences to responding too early, she said.
“Fundamentally, if it’s supply-side driven, that’s not something monetary policy should be responding to,” Mester said, adding that officials should keep an eye on inflation expectations and other indicators to know if monetary policy is too accommodative or not providing enough accommodation.
Fed officials have signaled they could begin reducing the U.S. central bank's $120 billion in monthly asset purchases as soon as November here.
Policymakers set a higher bar for raising interest rates, which Mester previously said could be met by the end of 2022 here if the labor market continues to improve.
Reporting by Jonnelle Marte; Editing by Andrea Ricci
https://www.reuters.com/article/usa-fed ... SKBN2GX21G
"Fed's Mester says U.S. inflation mostly driven by pandemic-related factors"
By Jonnelle Marte
OCTOBER 7, 2021
NEW YORK (Reuters) - Both supply-side and demand-side factors are contributing to U.S. inflation right now, but most of the current price changes may be driven by pandemic-related shifts that could subside over time, Cleveland Federal Reserve Bank President Loretta Mester said on Thursday.
Policymakers need to distinguish short-term inflationary pressures from inflation that could be longer lasting when determining how to respond, Mester said during a panel organized by the European Central Bank.
“How much of that increase is driven by supply shocks and how much of it is driven by demand that would respond to monetary policy?” Mester said.
An increase in medium- and long-term inflation expectations, paired with a continued rise in inflation, could be a sign that the price changes are being driven more by higher demand than policymakers anticipate, said Mester.
However, the Fed official, who will have a vote next year on the Fed’s policy-setting committee, said that is not her baseline forecast.
“Right now, my view is it’s pandemic related but we’ll have to wait and see,” said Mester.
Some of the supply-side challenges caused by the pandemic may take longer to be resolved than initially expected and policymakers will keep an eye on those upside risks to inflation, Mester said.
But there are consequences to responding too early, she said.
“Fundamentally, if it’s supply-side driven, that’s not something monetary policy should be responding to,” Mester said, adding that officials should keep an eye on inflation expectations and other indicators to know if monetary policy is too accommodative or not providing enough accommodation.
Fed officials have signaled they could begin reducing the U.S. central bank's $120 billion in monthly asset purchases as soon as November here.
Policymakers set a higher bar for raising interest rates, which Mester previously said could be met by the end of 2022 here if the labor market continues to improve.
Reporting by Jonnelle Marte; Editing by Andrea Ricci
https://www.reuters.com/article/usa-fed ... SKBN2GX21G
Re: THE FEDERAL RESERVE
REUTERS
"Bullard says he wants Fed in position to raise rates by spring"
By Reuters Staff
OCTOBER 12, 20214:37 PM
Oct 12 (Reuters) - St. Louis Fed Bank President James Bullard said on Tuesday that he supports the Fed’s starting to taper its asset purchases next month and ending them by next spring so that the U.S. central bank could raise interest rates to tamp down on inflation if it needs to.
“The story that inflation will come naturally is a reasonable one, but I only want to put 50% probability on that scenario,” Bullard said in a CNBC interview, adding that he wants to be prepared for the possibility that inflation stays high or goes higher in the months ahead.
“I just want to be in position in case we have to move sooner that we are able to do so next year in the spring or summer if we had to do so.”
(Reporting by Ann Saphir; Editing by Leslie Adler)
https://www.reuters.com/article/usa-fed ... SS0N2O4011
"Bullard says he wants Fed in position to raise rates by spring"
By Reuters Staff
OCTOBER 12, 20214:37 PM
Oct 12 (Reuters) - St. Louis Fed Bank President James Bullard said on Tuesday that he supports the Fed’s starting to taper its asset purchases next month and ending them by next spring so that the U.S. central bank could raise interest rates to tamp down on inflation if it needs to.
“The story that inflation will come naturally is a reasonable one, but I only want to put 50% probability on that scenario,” Bullard said in a CNBC interview, adding that he wants to be prepared for the possibility that inflation stays high or goes higher in the months ahead.
“I just want to be in position in case we have to move sooner that we are able to do so next year in the spring or summer if we had to do so.”
(Reporting by Ann Saphir; Editing by Leslie Adler)
https://www.reuters.com/article/usa-fed ... SS0N2O4011
Re: THE FEDERAL RESERVE
REUTERS
"Fed policymakers hone in on November taper timeline"
By Lindsay Dunsmuir, Ann Saphir
OCTOBER 12, 2021
(Reuters) -Three U.S. Federal Reserve policymakers on Tuesday said the economy has healed enough for the central bank to begin to withdraw its crisis-era support, cementing expectations the Fed will start to taper its monthly bond purchases as soon as next month.
“I myself believe that the ‘substantial further progress’ standard has more than been met with regard to our price-stability mandate and has all but been met with regard to our employment mandate,” Fed Vice Chair Richard Clarida told the Institute of International Finance virtual annual meeting.
He was referring to the Fed’s promise to keep buying $120 billion of Treasuries and mortgage-backed securities each month until the economy had met that standard on both its mandates.
Fed policymakers at their last meeting agreed that tapering “may soon be warranted” and would likely conclude in the middle of next year, he said.
Clarida’s upbeat assessment likely echoes the sentiments of his boss, Fed Chair Jerome Powell, who previously said that he only needed to see a “decent” September U.S. jobs report to be ready to begin to taper bond buys in November.
The economy has strengthened and “conditions in the labor market have continued to improve,” Clarida said, although he noted the pandemic continues to weigh on employment and participation.
Speaking in separate appearances on Tuesday, both Atlanta Fed President Raphael Bostic and St. Louis Fed President James Bullard said they also endorsed a November start.
“I think that the progress has been made, and the sooner we get moving on that the better,” Bostic said in an interview with the Financial Times.
Bullard, speaking on CNBC, said he would like to wrap up the taper by the first quarter of 2022 so that if inflation stays high or goes even higher the Fed could raise rates “in the spring or summer if we had to do so.”
But he also said that such a move need not come at the cost of gains in the labor market.
Employers added a smaller-than-expected 194,000 jobs last month, a Labor Department report showed.
But Bullard said he expects growth to pick up in the fourth and first quarters, pushing the unemployment rate below 4% and to pre-pandemic levels by the spring.
Fed policymakers at their last meeting saw the unemployment rate falling to 4.8% by the end of this year, a benchmark Friday’s report showed it had already reached last month.
SWEAR JAR
The Fed began buying bonds as part of its emergency response to the COVID-19 pandemic in March 2020 to stabilize financial markets and keep borrowing costs low.
Bostic said at a virtual event organized by the Peterson Institute for International Economics that financial markets now have plenty of liquidity, minimizing the odds that tapering the purchases will have an adverse effect on markets or the economy.
“I actually think the economy has a lot of positive momentum,” Bostic said.
Bullard agreed, saying that despite the recent surge in COVID-19 cases that slowed growth last quarter, the economy is in “great shape.”
U.S. economic output has rebounded higher than pre-pandemic levels; Americans are sitting on at least $2.5 trillion in excess savings accumulated during the pandemic and consumer spending remains strong.
Bond buys most directly affect demand whereas economies worldwide are struggling with labor and goods shortages.
Indeed, the surge in demand as the U.S. economy reopened has caused a spike in inflation with persistent supply bottlenecks set to keep price increases well above the Fed’s 2% average inflation goal through the end of the year and into 2022.
That has raised fear of a 1970s-style “stagflation,” where economic growth grinds to a halt but inflation keeps rising.
Fed policymakers on Tuesday said that’s not their expectation.
“The big unknown right now is how long it will take for these bottleneck effects to work their way through,” Clarida said in a question and answer session, but the expectation is that they will recede.
“My baseline case is not for stagflation over the medium horizon.”
And though analysts have raised the possibility that rising inflation could force the central bank to raise interest rates from near zero before the labor market is fully healed, Clarida and other policymakers played down that possibility.
“The risks to inflation are to the upside,” Clarida acknowledged but said he still believes the upward impulse is “transitory,” with inflation expectations anchored and rising wages not feeding a worrisome upward price spiral.
Bostic for his part joked that at his bank anyone using the word “transitory” to describe inflation has to put $1 in a swear jar, because the current episode of rising prices is proving to be far from brief.
Still, he said, he does not expect high inflation to persist or cause lasting damage to the economy that “would really call into question our policy stance in terms of interest rates.”
It will be more than a year before the central bank will need to raise rates from near zero levels, he said.
Reporting by Lindsay Dunsmuir and Ann Saphir; Additional reporting by Jonnelle Marte; Editing by Andrea Ricci and Cynthia Osterman
https://www.reuters.com/article/usa-fed ... SL1N2R81BR
"Fed policymakers hone in on November taper timeline"
By Lindsay Dunsmuir, Ann Saphir
OCTOBER 12, 2021
(Reuters) -Three U.S. Federal Reserve policymakers on Tuesday said the economy has healed enough for the central bank to begin to withdraw its crisis-era support, cementing expectations the Fed will start to taper its monthly bond purchases as soon as next month.
“I myself believe that the ‘substantial further progress’ standard has more than been met with regard to our price-stability mandate and has all but been met with regard to our employment mandate,” Fed Vice Chair Richard Clarida told the Institute of International Finance virtual annual meeting.
He was referring to the Fed’s promise to keep buying $120 billion of Treasuries and mortgage-backed securities each month until the economy had met that standard on both its mandates.
Fed policymakers at their last meeting agreed that tapering “may soon be warranted” and would likely conclude in the middle of next year, he said.
Clarida’s upbeat assessment likely echoes the sentiments of his boss, Fed Chair Jerome Powell, who previously said that he only needed to see a “decent” September U.S. jobs report to be ready to begin to taper bond buys in November.
The economy has strengthened and “conditions in the labor market have continued to improve,” Clarida said, although he noted the pandemic continues to weigh on employment and participation.
Speaking in separate appearances on Tuesday, both Atlanta Fed President Raphael Bostic and St. Louis Fed President James Bullard said they also endorsed a November start.
“I think that the progress has been made, and the sooner we get moving on that the better,” Bostic said in an interview with the Financial Times.
Bullard, speaking on CNBC, said he would like to wrap up the taper by the first quarter of 2022 so that if inflation stays high or goes even higher the Fed could raise rates “in the spring or summer if we had to do so.”
But he also said that such a move need not come at the cost of gains in the labor market.
Employers added a smaller-than-expected 194,000 jobs last month, a Labor Department report showed.
But Bullard said he expects growth to pick up in the fourth and first quarters, pushing the unemployment rate below 4% and to pre-pandemic levels by the spring.
Fed policymakers at their last meeting saw the unemployment rate falling to 4.8% by the end of this year, a benchmark Friday’s report showed it had already reached last month.
SWEAR JAR
The Fed began buying bonds as part of its emergency response to the COVID-19 pandemic in March 2020 to stabilize financial markets and keep borrowing costs low.
Bostic said at a virtual event organized by the Peterson Institute for International Economics that financial markets now have plenty of liquidity, minimizing the odds that tapering the purchases will have an adverse effect on markets or the economy.
“I actually think the economy has a lot of positive momentum,” Bostic said.
Bullard agreed, saying that despite the recent surge in COVID-19 cases that slowed growth last quarter, the economy is in “great shape.”
U.S. economic output has rebounded higher than pre-pandemic levels; Americans are sitting on at least $2.5 trillion in excess savings accumulated during the pandemic and consumer spending remains strong.
Bond buys most directly affect demand whereas economies worldwide are struggling with labor and goods shortages.
Indeed, the surge in demand as the U.S. economy reopened has caused a spike in inflation with persistent supply bottlenecks set to keep price increases well above the Fed’s 2% average inflation goal through the end of the year and into 2022.
That has raised fear of a 1970s-style “stagflation,” where economic growth grinds to a halt but inflation keeps rising.
Fed policymakers on Tuesday said that’s not their expectation.
“The big unknown right now is how long it will take for these bottleneck effects to work their way through,” Clarida said in a question and answer session, but the expectation is that they will recede.
“My baseline case is not for stagflation over the medium horizon.”
And though analysts have raised the possibility that rising inflation could force the central bank to raise interest rates from near zero before the labor market is fully healed, Clarida and other policymakers played down that possibility.
“The risks to inflation are to the upside,” Clarida acknowledged but said he still believes the upward impulse is “transitory,” with inflation expectations anchored and rising wages not feeding a worrisome upward price spiral.
Bostic for his part joked that at his bank anyone using the word “transitory” to describe inflation has to put $1 in a swear jar, because the current episode of rising prices is proving to be far from brief.
Still, he said, he does not expect high inflation to persist or cause lasting damage to the economy that “would really call into question our policy stance in terms of interest rates.”
It will be more than a year before the central bank will need to raise rates from near zero levels, he said.
Reporting by Lindsay Dunsmuir and Ann Saphir; Additional reporting by Jonnelle Marte; Editing by Andrea Ricci and Cynthia Osterman
https://www.reuters.com/article/usa-fed ... SL1N2R81BR
Re: THE FEDERAL RESERVE
CNBC
"Fed says it could begin ‘gradual tapering process’ by mid-November"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
KEY POINTS
*The Federal Reserve could begin reducing the pace of its monthly asset purchases as soon as mid-November, according to minutes from the September meeting,
* The summary, released Wednesday, indicated the tapering process could see a monthly reduction of $10 billion in Treasurys and $5 billion in mortgage-backed securities.
* Officials at the meeting expressed concern about inflation, saying it could last longer “than they currently assumed.”
Federal Reserve officials could begin reducing the extraordinary help they’ve been providing to the economy by as soon as mid-November, according to minutes from the central bank’s September meeting released Wednesday.
The meeting summary indicated members feel the Fed has come close to reaching its economic goals and soon could begin normalizing policy by reducing the pace of its monthly asset purchases.
In a process known as tapering, the Fed would reduce the $120 billion a month in bond buys slowly.
The minutes indicated the central bank probably would start by cutting $10 billion a month in Treasurys and $5 billion a month in mortgage-backed securities.
The Fed is currently buying at least $80 billion in Treasurys and $40 billion in MBS.
The target date to end the purchases should there be no disruptions would be mid-2022.
The minutes noted “participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate.”
“Participants noted that if a decision to begin tapering purchases occurred at the next meeting, the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December,” the summary said.
The Fed next meets Nov. 2-3.
Starting the tapering process in November is on the aggressive side of market expectations.
The minutes said members’ estimates “were consistent with a gradual tapering of net purchases being completed in July of next year.”
“If they announce [tapering] in November, I don’t see why they would wait."
"Just go ahead and get going,” said Kathy Jones, chief fixed income strategist at Charles Schwab.
Jones said she was a bit surprised by a notation in the minutes that “several” members “preferred to proceed with a more rapid” tapering pace.
“That would be pretty aggressive,” she said.
“There must be some outspoken people who are pretty concerned that they need to move even faster.”
St. Louis Fed President James Bullard is one such member, telling CNBC on Tuesday that he thinks tapering should be more aggressive in case the Fed needs to rate interest rates next year to combat persistent inflation.
At the September policymaking session, the committee voted unanimously to hold the central bank’s benchmark short-term borrowing rate at zero to 0.25%.
The committee also released the summary of its economic expectations, including projections for GDP growth, inflation and unemployment.
Members scaled back their GDP estimates for this year but upped their outlook for inflation, and indicated they expect unemployment to be lower than earlier estimates.
Concerns about inflation
In the “dot plot” of individual members’ expectations for interest rates, the committee indicated it could begin raising interest rates as soon as 2022.
Markets currently are pricing in the first rate hike for next September, according to the CME FedWatch tool.
Following the release of the minutes, traders increased the likelihood of a September hike to 65% from 62%.
Officials, though, stressed that a tapering decision should not be seen as implying pending interest rate hikes.
However, some members at the meeting showed concern that current inflation pressures might last longer than they had anticipated.
Traders are pricing in a 46% chance of two rate hikes in 2022.
“Most participants saw inflation risks as weighted to the upside because of concerns that supply disruptions and labor shortages might last longer and might have larger or more persistent effects on prices and wages than they currently assumed,” the minutes stated.
The document noted that “a few participants” said there could be some “downside risks” for inflation as long-standing factors that have kept prices in check come back into play.
The majority of Fed officials have been holding to theme that the current price increases are transitory and due to supply chain bottlenecks, and other factors likely to subside.
Inflation pressures have continued, though, with a reading Wednesday showing that consumer prices are up 5.4% over the past year, the fastest pace in decades.
https://www.cnbc.com/2021/10/13/federal ... eting.html
"Fed says it could begin ‘gradual tapering process’ by mid-November"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
KEY POINTS
*The Federal Reserve could begin reducing the pace of its monthly asset purchases as soon as mid-November, according to minutes from the September meeting,
* The summary, released Wednesday, indicated the tapering process could see a monthly reduction of $10 billion in Treasurys and $5 billion in mortgage-backed securities.
* Officials at the meeting expressed concern about inflation, saying it could last longer “than they currently assumed.”
Federal Reserve officials could begin reducing the extraordinary help they’ve been providing to the economy by as soon as mid-November, according to minutes from the central bank’s September meeting released Wednesday.
The meeting summary indicated members feel the Fed has come close to reaching its economic goals and soon could begin normalizing policy by reducing the pace of its monthly asset purchases.
In a process known as tapering, the Fed would reduce the $120 billion a month in bond buys slowly.
The minutes indicated the central bank probably would start by cutting $10 billion a month in Treasurys and $5 billion a month in mortgage-backed securities.
The Fed is currently buying at least $80 billion in Treasurys and $40 billion in MBS.
The target date to end the purchases should there be no disruptions would be mid-2022.
The minutes noted “participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate.”
“Participants noted that if a decision to begin tapering purchases occurred at the next meeting, the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December,” the summary said.
The Fed next meets Nov. 2-3.
Starting the tapering process in November is on the aggressive side of market expectations.
The minutes said members’ estimates “were consistent with a gradual tapering of net purchases being completed in July of next year.”
“If they announce [tapering] in November, I don’t see why they would wait."
"Just go ahead and get going,” said Kathy Jones, chief fixed income strategist at Charles Schwab.
Jones said she was a bit surprised by a notation in the minutes that “several” members “preferred to proceed with a more rapid” tapering pace.
“That would be pretty aggressive,” she said.
“There must be some outspoken people who are pretty concerned that they need to move even faster.”
St. Louis Fed President James Bullard is one such member, telling CNBC on Tuesday that he thinks tapering should be more aggressive in case the Fed needs to rate interest rates next year to combat persistent inflation.
At the September policymaking session, the committee voted unanimously to hold the central bank’s benchmark short-term borrowing rate at zero to 0.25%.
The committee also released the summary of its economic expectations, including projections for GDP growth, inflation and unemployment.
Members scaled back their GDP estimates for this year but upped their outlook for inflation, and indicated they expect unemployment to be lower than earlier estimates.
Concerns about inflation
In the “dot plot” of individual members’ expectations for interest rates, the committee indicated it could begin raising interest rates as soon as 2022.
Markets currently are pricing in the first rate hike for next September, according to the CME FedWatch tool.
Following the release of the minutes, traders increased the likelihood of a September hike to 65% from 62%.
Officials, though, stressed that a tapering decision should not be seen as implying pending interest rate hikes.
However, some members at the meeting showed concern that current inflation pressures might last longer than they had anticipated.
Traders are pricing in a 46% chance of two rate hikes in 2022.
“Most participants saw inflation risks as weighted to the upside because of concerns that supply disruptions and labor shortages might last longer and might have larger or more persistent effects on prices and wages than they currently assumed,” the minutes stated.
The document noted that “a few participants” said there could be some “downside risks” for inflation as long-standing factors that have kept prices in check come back into play.
The majority of Fed officials have been holding to theme that the current price increases are transitory and due to supply chain bottlenecks, and other factors likely to subside.
Inflation pressures have continued, though, with a reading Wednesday showing that consumer prices are up 5.4% over the past year, the fastest pace in decades.
https://www.cnbc.com/2021/10/13/federal ... eting.html
Re: THE FEDERAL RESERVE
CNBC
"Consumer prices rise more than expected as energy costs surge"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, OCT 13 2021
KEY POINTS
* Consumer prices overall rose 0.4% in September, pushing the year-over-year gain to 5.4%.
* Excluding food and energy, the gain was just 0.2% and 4%, respectively.
* Energy and food prices climbed, while used car prices, which had been a central story in the inflation picture this year, declined.
Consumer prices increased slightly more than expected in September as food and energy price rises offset declines in used cars, the Labor Department reported Wednesday.
The consumer price index for all items rose 0.4% for the month, compared with the 0.3% Dow Jones estimate.
On a year-over-year basis, prices increased 5.4% versus the estimate for 5.3% and the highest since January 1991.
However, excluding volatile food and energy prices, the CPI increased 0.2% on the month and 4% year over year, against respective estimates for 0.3% and 4%.
Dow futures were slightly positive following the news but fell sharply through the morning, while government bond yields were mostly lower as investors gravitated toward safe-haven fixed income.
Gasoline prices rose another 1.2% for the month, bringing the annual increase to 42.1%.
Fuel oil shot up 3.9%, for a 42.6% year over year surge.
Food prices also showed notable gains for the month, with food at home rising 1.2%.
Meat prices rose 3.3% just in September and increased 12.6% year over year.
“Food and energy are more variable, but that’s where the problem is,” said Bob Doll, chief investment officer at Crossmark Global Investments.
“Hopefully, we start solving our supply shortage problem."
"But when the dust settles, inflation is not going back to zero to 2 [percent] where it was for the last decade.”
Used car prices, which have been at the center of much of the inflation pressures in recent months, fell 0.7% for the month, pulling the 12-month increase down to 24.4%.
However, the continued rise in prices even with the drop in vehicle costs could lend credence to the notion that inflation is more persistent than policymakers think.
Airline fares tumbled 6.4% for the month after falling 9.1% in July.
Shelter prices, which make up about a third of the CPI, increased 0.4% for the month and are up 3.2% for the 12-month period.
Owners’ equivalent rent or how much an owner of a property would have to pay to rent it, increased 0.4% as well, its largest monthly gain since June 2006.
“This might just be an overshoot after a couple of relatively modest increases, but we can’t rule out the idea that the fundamentals — rapid house price gains, more aggressive landlord pricing, low inventory, and faster wage growth — are pushing up the trend,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Apparel prices also declined 1.1% in September while transportation services dropped 0.5%.
Both sectors have been rising consistently and still showed respective annual gains of 3.4% and 4.4%.
Federal Reserve officials have called the current inflation run “transitory,” and attribute it largely to supply chain and demand issues that they expect to subside in the months ahead.
However, that view has been receiving substantial pushback lately.
“This is one more data point to say, ‘Fed, your trying to convince us that inflation is transitory is just not believable,’” Doll said.
“If you know anybody who doesn’t have to live somewhere, doesn’t eat any food and doesn’t use energy, then inflation is maybe not a particular problem."
"But come on.”
On Tuesday, the International Monetary Fund warned that the Fed and its global peers should be preparing contingency plans should inflation prove persistent.
That would mean raising interest rates sooner than expected to control the price gains.
Later in the day, St. Louis Fed President James Bullard told CNBC that he thinks the Fed should be more aggressive in withdrawing its economic support, and in particular its monthly bond purchases, should inflation prove a problem and require rate hikes next year.
Also on Tuesday, Atlanta Fed President Raphael Bostic said the factors that have pushed inflation higher “will not be brief.”
“Today’s number shouldn’t move the needle for the Fed,” said Seema Shah, chief investment strategist at Principal Global Investors.
“Inflation has already surpassed its goal and, if anything, the higher-than-expected September CPI just reinforces the need to start tapering."
"November tapering, here we come.”
JPMorgan Chase CEO Jamie Dimon on Monday took the transitory side of the argument, saying that the current conditions will clear up and inflation won’t be a factor in 2022.
https://www.cnbc.com/2021/10/13/the-con ... imate.html
"Consumer prices rise more than expected as energy costs surge"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, OCT 13 2021
KEY POINTS
* Consumer prices overall rose 0.4% in September, pushing the year-over-year gain to 5.4%.
* Excluding food and energy, the gain was just 0.2% and 4%, respectively.
* Energy and food prices climbed, while used car prices, which had been a central story in the inflation picture this year, declined.
Consumer prices increased slightly more than expected in September as food and energy price rises offset declines in used cars, the Labor Department reported Wednesday.
The consumer price index for all items rose 0.4% for the month, compared with the 0.3% Dow Jones estimate.
On a year-over-year basis, prices increased 5.4% versus the estimate for 5.3% and the highest since January 1991.
However, excluding volatile food and energy prices, the CPI increased 0.2% on the month and 4% year over year, against respective estimates for 0.3% and 4%.
Dow futures were slightly positive following the news but fell sharply through the morning, while government bond yields were mostly lower as investors gravitated toward safe-haven fixed income.
Gasoline prices rose another 1.2% for the month, bringing the annual increase to 42.1%.
Fuel oil shot up 3.9%, for a 42.6% year over year surge.
Food prices also showed notable gains for the month, with food at home rising 1.2%.
Meat prices rose 3.3% just in September and increased 12.6% year over year.
“Food and energy are more variable, but that’s where the problem is,” said Bob Doll, chief investment officer at Crossmark Global Investments.
“Hopefully, we start solving our supply shortage problem."
"But when the dust settles, inflation is not going back to zero to 2 [percent] where it was for the last decade.”
Used car prices, which have been at the center of much of the inflation pressures in recent months, fell 0.7% for the month, pulling the 12-month increase down to 24.4%.
However, the continued rise in prices even with the drop in vehicle costs could lend credence to the notion that inflation is more persistent than policymakers think.
Airline fares tumbled 6.4% for the month after falling 9.1% in July.
Shelter prices, which make up about a third of the CPI, increased 0.4% for the month and are up 3.2% for the 12-month period.
Owners’ equivalent rent or how much an owner of a property would have to pay to rent it, increased 0.4% as well, its largest monthly gain since June 2006.
“This might just be an overshoot after a couple of relatively modest increases, but we can’t rule out the idea that the fundamentals — rapid house price gains, more aggressive landlord pricing, low inventory, and faster wage growth — are pushing up the trend,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Apparel prices also declined 1.1% in September while transportation services dropped 0.5%.
Both sectors have been rising consistently and still showed respective annual gains of 3.4% and 4.4%.
Federal Reserve officials have called the current inflation run “transitory,” and attribute it largely to supply chain and demand issues that they expect to subside in the months ahead.
However, that view has been receiving substantial pushback lately.
“This is one more data point to say, ‘Fed, your trying to convince us that inflation is transitory is just not believable,’” Doll said.
“If you know anybody who doesn’t have to live somewhere, doesn’t eat any food and doesn’t use energy, then inflation is maybe not a particular problem."
"But come on.”
On Tuesday, the International Monetary Fund warned that the Fed and its global peers should be preparing contingency plans should inflation prove persistent.
That would mean raising interest rates sooner than expected to control the price gains.
Later in the day, St. Louis Fed President James Bullard told CNBC that he thinks the Fed should be more aggressive in withdrawing its economic support, and in particular its monthly bond purchases, should inflation prove a problem and require rate hikes next year.
Also on Tuesday, Atlanta Fed President Raphael Bostic said the factors that have pushed inflation higher “will not be brief.”
“Today’s number shouldn’t move the needle for the Fed,” said Seema Shah, chief investment strategist at Principal Global Investors.
“Inflation has already surpassed its goal and, if anything, the higher-than-expected September CPI just reinforces the need to start tapering."
"November tapering, here we come.”
JPMorgan Chase CEO Jamie Dimon on Monday took the transitory side of the argument, saying that the current conditions will clear up and inflation won’t be a factor in 2022.
https://www.cnbc.com/2021/10/13/the-con ... imate.html