Chris Rupkey
Chris Rupkey
businesses energy expect factor fed increased inflation interest major makers pass policy power prices pushing rates received rising sign worried
Prices received rising so much is the first sign that businesses have increased power to pass on these energy-price increases. Energy will shortly be a major factor in the inflation equation, and this is what the Fed is worried about, so expect policy makers to keep pushing interest rates higher.
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Growth isn't fast enough that the Fed has to brake the economy, and at the same time it isn't slow enough that the Fed can stop and watch. Inflation pressures can still gain a foothold as the economy continues to take up slack resources.
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It may be just a matter of time before the public's inflation expectations start to rise. Commodity prices are soaring.
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Unfortunately, I think they tried to fight the inflation dragon a little too long, and rejected the counsel of the markets which urged them to cut rates as early as November that year.
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They're not on the sidelines yet. The inflation pressures are immense at this stage of the business cycle.
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Higher energy prices are not providing any big headwinds for the economy and inflation remains very contained,
bit cause consistent early environment increase inflation lay momentum pressures rate resources slack sort spill taken
This is consistent with the idea that slack resources have been taken up in the economy. There is considerable momentum and this is the sort of environment where inflation pressures can spill over and actually cause an increase in the rate of inflation, so it is a bit early for them (the Fed) to lay down their saber.
economy economy-and-economics hit inflation last level surprised tested upside week yields
The economy surprised on the upside and inflation was a surprise on the upside so (10-year Treasury) yields tested the level we hit last week which was 5.14 percent.
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The details of the GDP report may have given Treasuries a boost as the Fed's preferred inflation target, the core personal consumption expenditures index, was revised down to 1.7 percent from 2 percent for the first quarter,
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The selling abated, prices stabilized and people decided the path of least resistance is up.
country entire production running
Manufacturing production in the entire country is running flat-out at the moment.
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Business capital spending is coming on strong and the timing of these equipment purchases could not be better. Business spending will take up the slack as the housing slowdown cools consumers' appetites.
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While it sounds as if most members see that the series of rate hikes since June 2004 is close to the end, it's not over until the economy slows. The minutes are a little past their stale date. Commodity prices are soaring.
fed officials point suggest
There is nothing at this point to suggest that Fed officials will pause.