Kudlow Carney: The Fed is stoking inflation and can “escape” from fighting it
The Fed’s accommodating economic policies have fueled inflation, and Fed officials can now “escape” from raising interest rates at their next meeting, Breitbart Economics editor John Carney said in an interview Friday on Larry Kudlow’s Fox Business show of the same name.
The Personal Consumption Expenditure (PCE) data released on Friday clearly shows that Fed officials prematurely slowed down interest rate hikes at their last two meetings.
Asked by Kudlow if the Fed would eventually have to raise the federal funds rate to 6 percent to curb inflation, Carney said they would “definitely” do so.
“If you look at what’s happening with the federal funds rate, everyone is talking about it being high already, between 4.5 percent and 4.75 percent. This is negative if you look at PCE inflation. So, we now have a really accommodative monetary policy,” he explained. “The Fed actually talked about it like it was already in restrictive territory. We No in the restricted area. If you look at all the January numbers – retail sales, consumer spending, jobs – it’s not a restrictive economy at all. This is an economy that the Fed is fueling with additional fuel. ”
According to Carney, the Federal Reserve “needs to raise rates” rather than keep cutting them. “I think they made a huge mistake in December when they went down to 50 basis points and another mistake in January when they went down to 25.”
“You can’t look at it and say it’s just an outlier or ignore it,” Carney explained. “Median, kernel and heading [inflation are] all the same. This is core inflation, which is 7.1% year on year.”
“We’re having a kind of temporary inflationary boom here,” Kudlow said.
As Carney noted in Friday’s Breitbart Business Digest review, it’s “not just one data point” showing this inflationary boom. Friday’s PCE data confirms the inflationary trend seen in the latest Consumer Price Index (CPI) and Producer Price Index (PPI) – all of which show that inflation is rising faster and stronger across the economy, including in food and energy prices, which most impact on the economy. public perception of inflation, because these costs hit people’s wallets on a daily basis.
Carney wrote:
The most politically important indicators of inflation – energy and food – were at their best in January. Food prices rose by 0.4 percent in PCE. While well below last year’s sky-high levels, when PCE food inflation peaked at 1.4 percent in February, this is the second consecutive month at 0.4. So, Progress in lowering food inflation stalled. It is also far above anything that could be considered historically normal.
[…]
Basic prices for basic foodstuffs, which do not include food and energy, rose 0.6% from the previous month. The forecast was for 0.4 percent. The increase in the core index for December was revised upward from 0.3 percent to 0.4 percent. The message is repeated: inflation is running faster and running faster than previously thought.
[…]
It is important to note that median PCE inflation tracked by the Cleveland Federal Reserve Bank was in line with headline inflation of 0.6 percent. This suggests that inflation is no longer a story about emissions, but a story about a central price trend. Median inflation is a good indication of where inflation is heading, and January’s figure is not good news. At 0.6, it was the highest median inflation since last August.
“I think if [Federal Reserve officials] if they had this data, they would not have reduced the price to 25 basis points,” said Carney Kudlow. “Therefore, it is very embarrassing for them to go up to 50 at the next meeting. I’m afraid they will chicken out, they will not be able to do this, because this is an admission that the January-February meeting was wrong. ”
“They shouldn’t have shaved off their chest hair,” Kudlow joked. “Powell had beautiful hair. He was tough. His new hero is [Paul] Walker. And then he kind of turned away and went back to this Rino-style nonsense. Now look where we are.”
“I think if the Fed had seen the change, if they had seen all this at their last meeting, they would never have moved. [the rate hikes],” he added. “And now they’ve basically painted themselves into a corner because they’ve put themselves in an awkward position if they go up from 25 [basis points]. Everyone thought it was 25 from here to the stop. Now they really should be back up to 50, but I don’t know if they’ll make it.”
Dallas Press News – Latest News:
Dallas Local News || Fort Worth Local News | Texas State News || Crime and Safety News || National news || Business News || Health News
texasstandard.news contributed to this report.
