Tillbaka till 2 procent? Really?
Minneapolis Fed President Neel Kashkari,
who prior to the pandemic was the central bank’s most dovish policy maker, said Wednesday that he wants the Fed’s benchmark interest rate at 3.9% by the end of this year and at 4.4% by the end of 2023
.
His Chicago counterpart, Charles Evans,
welcomed the news at a separate event Wednesday, but added that inflation remains “unacceptably high.” He said he expects “that we will be increasing rates the rest of this year and into next year to make sure inflation gets back to our 2% objective.”
Bloomberg 10 augusti 2022
The extent of the rally looks overdone, because of the critical issue of how long it will take to bring inflation down.
It’s nice that the peak is (probably) in; but the Fed wants us to believe that it won’t desist from high interest rates until its target of 2% core inflation is in sight. That won’t be easy.
John Authers Bloomberg 15 augusti 2022
To be sure, this could be the start of something big.
Maybe inflation really is going to trend lower from here. Maybe it was transitory after all, if you can torture the definition of transitory hard enough.
But if you think the Fed is going to take its foot off the gas with headline inflation running at 8.5 per cent, against its target of 2 per cent...
Katie Martin FT 12 August 2022
Lars Calmfors: nu ett bra tillfälle att se över det snart 30 år gamla inflationsmålet
Underlying inflation remains high, at least by the standards of the past 30 or so years.
There are many competing estimates of that underlying rate, but by and large they tend to be in the range of 4 percent to 5 percent, compared with a Federal Reserve target of 2 percent inflation.
So how hard will it be to achieve that target?
Getting 1980’s inflation down was a painful process.
U.S. economy is currently overheated in a way it wasn’t in 1980.
Paul Krugman NYT 12 August 2022
Will the FOMC say “mission accomplished” at 6.5% inflation?
What happens if we get a recession in 2023 like the yield curve is predicting?
John Mauldin August 12, 2022
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