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Kayıt Tarihi: 13-Kasım-2019
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| Gönderen: 08-Eylül-2020 Saat 19:22 | Kayıtlı IP
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Markets Tell the Fed Its Finally Getting an Edge on
Inflation
Traffic passes the Marriner S. Eccles Federal Reserve
building in Washington, D.C., on Aug. 18.To get more news
about
https://www.wikifx.com
, you can visit wikifx official website.
The $20 trillion U.S. Treasury market is giving the
Federal Reserve a thumbs-up for its efforts to revive
inflation after the coronavirus pandemic threatened to
inflict a damaging bout of deflation on the U.S. economy.
A surge in gold prices above $2,000 and ounce and a
weakening dollar have also focused attention on the
outlook for inflation. If investors are betting price
increases will accelerate, the hope is that consumers and
companies spend enough for that to happen, given
inflation is still well below the Feds 2% target. That
goal has never been reached on a sustained basis since it
was adopted in 2012.
But Fed officials are more worried about the economy
running out of steam than overheating. Theyre warning
Congress about the dangers of spending too little, not
splurging too much.
There are already signs that the pickup in inflation
pricing wont continue to accelerate at the same pace, and
that means the Fed is likely to keep monetary policy
loose -- perhaps even looser than now -- for years to
come in the belief it can adjust if inflation suddenly
surges.
The market signals are “exactly what the Federal
Open Market Committee should want to see at this juncture
when inflation expectations are too low and policy space
is limited,” Evercore ISI vice chairman Krishna Guha
wrote in a note to clients.
Ten-year breakeven rates –- which combine the yields
on standard and inflation-linked Treasuries into a
measure of what bond markets expect consumer prices to do
-- have jumped to about 1.69%, from as low as 0.47% in
March.
Actual consumer prices rose 1% in July from a year
ago, pushing core inflation to a four-month high of 1.6%.
And consumer expectations for inflation in three years
time increased to 2.73%, the most in more than a year.
But economists generally saw the pickup as a reversal of
distortions created by the virus lockdown, rather than a
red flag. Fed Bank of Boston President Eric Rosengren
agreed.
“It is very premature to be concerned about a
significant increase in inflation,” Rosengren told
Bloomberg Television. He said its “critically
important” for Congress to provide more fiscal support
for the economy.
The White House and Democratic leaders are arguing
over how much additional money is needed. Key parts of
the government rescue effort, like extra unemployment
benefits, have begun to expire –- a potential drag on
demand, just as a resurgent virus sets back efforts to
reopen the economy.
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