Jerome Powell – the Fed chair, said in a prepared statement yesterday that they are still a ‘ways off’ from altering policy and he expects inflation to moderate as it is seen as a temporary situation.
He said that the economy needs to improve more before the central bank will change its ultra easy monetary policy. So no change there then – cheap free flow of money to be pumped further in to the all ready over expanded stock market.
He also said that the labour market in particular is still well below where it was before the Covid-19 pandemic hit.
Powell noted that the Fed’s benchmark of ‘substantial further progress’ toward full employment and stable prices remains ‘a ways off.’ But he did remark that Fed officials at least are talking about reducing the pace of asset purchases.
On inflation, Powell said it ‘has increased notably and will likely remain elevated in coming months before moderating.’
But he yet again stuck to his mantra that the current surge is temporary and will be offset as conditions return to normal. He stressed that much of the current price pressure comes from a few industries such as used cars that are sensitive to temporary conditions.
All OK then
So, that’s all okay then. Inflation sits at 5.4% and 3.4% above target and the highest its been since the last financial crisis of 2008 – (but it’s only temporary, so don’t worry – it may last for a while yet, but it’s just transitory).
Stock market money fest
The stock market has been gorging on free money and it’s now so fat it’s due to pop at any time. Debt is out of control and the pandemic is too. The pressure on interest rate rises is also rising. But, don’t worry inflation is only temporary.
Tell that to the man on the street and the small business struggling to survive. What about all those that have already gone to the wall!
Prices have already gone up and the Fed has already revised its ‘opinion’. But hey, no worries – we’ll just keep pumping the money in until it pops and then we can sort that problem out too with even more ‘easy’ money.
The stock market is having a laugh!
How much more support does the Fed really need to give?
It will never fail – will it?