Tag: Inflation

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(This post would have been shorter, but for inflation.) If you believe there is inflation, does that make you an “Inflation Truther”? Does that belief mean you are an ignorant gold-hawking rube from the Ricochet fever swamps? If you doubt the government Consumer Price Index figures, are you a conspiracy theorist? Preview Open

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Coming Up Next on That 70s Show: Stagflation?

 

shutterstock_167938691Last week, the European Central Bank lowered interest rates — to negative 0.1%. “What,” you may ask, “is a negative interest rate?”

As the New York Times explained before the move,

When a bank pays a 1 percent interest rate, it’s clear what happens: If you deposit your money at the bank, it will pay you a penny each year for every dollar you deposited. When the interest rate is negative, the money goes the other direction.

How to Think About Inflation and Deflation — James Pethokoukis

 

041514inflation-600x400The March consumer inflation numbers showed prices rising faster than expected and up from last month. In the 12 months through March, consumer prices increased 1.5% versus 1.1% in February. The core CPI, which strips out the volatile energy and food bits, rose 1.7% versus 1.6% in February.

Analysis from IHS Global Insight:

Overall, the consumer inflation story is relatively bland. However, the direction of food prices is somewhat worrisome. Average consumers will have no cause to consider inflation rampant, but living standards will suffer as a larger percentage of household budgets are spent on grocery store bills, leaving less for discretionary spending.

Member Post

 

Many people don’t trust the government to report inflation correctly. I don’t trust the government in general, but I am less skeptical about the data aggregators. Even if they are doing it less than ideally, they are most likely doing it consistently, which means at least the changes in the data are meaningful, even if […]

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Janet Yellen and the Great Woman Theory of Monetary Policy — James Pethokoukis

 

A “market rattling” press-conference performance from Janet Yellen, and Wall Street is suddenly thick with Ben Bernanke nostalgia. “The more experienced Bernanke knew to avoid clarifying deliberately vague statement language,” wrote JPMorgan economist Michael Feroli in a research note. Feroli was referencing Yellen’s squishy, off-the-cuff remark that interest rate hikes might start earlier rather than later next year, or “about six months” after the end of the central bank’s bond buying program. A “rookie gaffe” is how economist Paul Edelstein of IHS Global Insight put it.

Judge the new Fed chair’s debut as you will, but the bottom line is that Fed policymakers now expect rates to be a bit higher in 2015 and 2016 than they did previously. Also of note: The Fed de facto downgraded the efficiency of the US economy, as seen in its projection of reduced GDP growth and unemployment. These changes suggest, from the Fed’s perspective, more structural weakness in labor markets and an economy that, the WSJ’s Justin Lahart explains, “generates more inflation at a lower rate of growth — a notion reinforced by the Fed’s stepped-up expectation of when it will be time to raise rates.” Despite the decline in labor force participation and the share of adults working, the Yellen Fed is suddenly concerned about the inflation risk of tight labor markets.