Powell wary of another inflation 'head fake' Powell wary of another inflation 'head fake' http://www.georgiaprime.com/ga/static/images/ga/ga-logo-amp.png http://www.georgiaprime.com/ga/daf\images\insights\article\georgia-downtown-small.jpg November 10 2023 November 13 2023

Powell wary of another inflation 'head fake'

Weekly Cash Commentary

Published November 13 2023

No fewer than 14 Federal Reserve officials spoke last week. But the most important voice, Chair Jerome Powell, came at a high-profile event. He spoke on a panel at a Washington, D.C., conference of the International Monetary Fund.

Basketball has become an international sport in the last few decades, so his comment that “Inflation has given us a few head fakes,” probably was understood by most participants. It is a good way to articulate the concern the Fed has about ending the tightening cycle too soon. If they don’t hold rates high enough or cut prematurely—and inflation reverses course—they risk losing credibility and weakening their sway over the markets.

Consumer and business Inflation expectations are nearly as important as actual inflation. Powell has said on several occasions that, if projections of high inflation become entrenched, the Fed’s ability to bring it back to the 2% target will be greatly compromised. And so, he emphasized the Fed’s commitment to restoring price stability, saying he and his colleagues “will not hesitate” to raise rates if it inflation doesn’t cooperate more than it has.

Tags Markets/Economy . Liquidity .

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

Issued and approved by Federated Investment Counseling