Macro
May 12, 2024
The Federal Reserve's Dangerous Game of Chicken with Core Inflation
By refusing to hike rates further despite three consecutive months of hot CPI prints, the central bank risks unanchoring long-term expectations to save regional banks.
The math is uncompromising. When the shelter component of the Consumer Price Index runs at 5.5% annualized, and auto insurance spikes 22% year-over-year, claiming the trajectory is "disinflationary" requires magical thinking. The Fed's latest dot plot reveals a committee divided not by data, but by fear of breaking the Treasury market.
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