From Bloomberg:

But Jack Manley at JPMorgan Chase argues that the Fed’s current rate range of 5.25% to 5.5% are actually inflationary at this point, and that prices won’t stabilize more until the the central bank starts cutting.

“A lot of what’s going on with inflation today can be linked very closely with the level of interest rates,” Manley said. “You slice and dice inflation and whether you’re looking at the headline number, whether you’re looking at the core number, you’re removing the goods equation — so much of it has to do with the rate environment.”

Apparently, Dr. Stephanie Kelton is an adherent of this view.

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Per Eeckhout (2023), actuals for CPI and PPI, and nowcast for PCE, headline and core.

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In tomorrow’s lecture on the Phillips Curve and the recent inflation surge for Econ 442, I ask whether a modifed Blanchard-Cerutti-Summers (2015) Phillips Curve specification can predict the disinflation. Answer: Yes.

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That article prompted me to  wondered whether Wisconsin’s grocery prices had moved up faster than the Nation’s. They have!

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A reader takes issue with my post showing y/y and instantaneous core PCE deflator versus 2% target, noting (correctly) that as of 2020, the Fed’s new monetary strategy incorporates Flexible Average Inflation Targetting (FAIT). While I might have missed it, I don’t recall how one should operationalize FAIT in terms of graphs and rates of reversion to trend lines. The reader gives no guidance, merely a criticism, so I will update what I’ve posted before.

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Technically, the Fed targets the PCE deflator, but many use the core PCE as a proxy. I show what the data indicate, including the Cleveland Fed’s nowcast as of 3/14 for February.

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That’s the title of an article in Bloomberg today.

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