Inflation Expectations – By NEIL SISKIND

I’m not so sure the Fed wants the economy to run hot. I think it wants people to think it wants the economy to run hot b/c how will the Fed get inflation higher w/o higher inflation expectations?

The Fed knows we have a structural problem here (w/o infrastructure). It’s a mind game.

The question becomes, if the expectations lead to inflation higher, then does the Fed keep it’s word on running hot. What would the Fed do? And that is why Secretary Yellen (and Chairman Powell) dismiss this question and say- “Oh, we can fix it if it’s too hot. We have the tools”.

What they may mean is that they can’t easily remove inflation … BUT they can more easily tamp down inflation expectations with new rhetoric.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s