Think Again About Persistent Inflation - and the Non-Partisan Fed
Now that the US midterm election is over, markets and the financial press are returning to a more dovish outlook and concluding that major sources of inflationary pressure were transitory after all. But it may not last, because monetary policy appears to have been following politics more closely than its practitioners want to admit.
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AUSTIN – Two days after the midterm elections in the United States, the Financial Times reported that US inflation has slowed, markets are “giddy,” and the Federal Reserve may now ease up on its interest-rate hikes. The timing was strategic, given that the push from oil prices ended in June, and that overall price changes have been low since July. With the election over, it seems, now it is safe to admit the facts.