News about inflation, Fed

As a follow-up to yesterday's #FederalReserve press conference, here are some thoughts on why Chair Powell's surprisingly dovish tone and context may end up being appropriate...though not for the reasons he put forward. www.ft.com/content/aa8c68f7-9dad-465f-ab92-c64c38337a84 #economy @FT #markets #inflation

Asked about the level of inflation, Federal Reserve Chair Powell responds "3% cannot be in a sentence with satisfactory." What if 3% turns out to be closer to the equilibrium inflation rate for a US economy (i) going through major structural changes, several of which are…

The most significant part of #Powell's dovish announcement and press conference was reducing monthly QT from $95B to $60B. To fight really #inflation, the #Fed should expand QT and raise interest rates. The next adjustment will be a return to QE even as YoY #CPI keeps moving up.

My guess is despite overwhelming evidence of #stagflation, #Powell will push back against this reality later today. He will likely reassure markets that the U.S. economy remains strong, #inflation is still forecast to fall to 2% over time, and that rate cuts remain appropriate.