Transitory. That s something we ve been hearing a lot lately.
At its latest FOMC meeting the Fed naturally decided to keep the fed funds rate target at 0.25%.
It also decided not to mess with the $120 billion monthly bond buying program to help support the flow of credit to households and businesses. Par for the course.
Meanwhile inflation numbers of the previous four months have been anything but typical. The Fed s favored Personal Consumption Expenditures Price Index has soared: in February it was 1.6%, March 2.4%, April 3.6% and in May 3.9%.
But headline CPI recently came in at 5%, reaching a 10-year high.
These recent months of elevated and increasing prices may have been exacerbated by price plunges due to the COVID-19 pandemic. But those were for a few months, and their effects should already have dissipated. And yet, they haven t.
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