21 Jul Quarterly Review Q2 2021
SEEING THE WHITES OF INFLATION’S EYES
Debating whether the Federal Reserve (Fed) will “fire” against oncoming inflation is a fitting analogy as America turns 245. Troops defending Bunker Hill* during the early stages of the American Revolutionary War were told not to fire until they saw the “whites of the eyes” of opposing forces. Federal Reserve Chair Jerome Powell has more or less committed to the same on inflation. But some might argue we are, in fact, seeing those eye whites. Inflation, as indicated by the Fed’s preferred measure (core personal consumption expenditures), is at 3.4% year-over-year and well above the 2% Fed target. Will the Fed fire? It depends on whether the inflationary forces continue to march or retreat. We review each possibility. Read the full Quarterly Review Q2 2021.
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