Taper tensions: US central bank under pressure as prices surge

Financial Times/James Politi and Colby Smith

Repost from 7-16-2021

“Jay Powell, chair of the Federal Reserve, has so far succeeded in steering the US central bank and financial markets towards his view that the surge of inflation gripping America will be fleeting. But confidence in that judgment was called into question on Tuesday after a larger-than-expected increase in the June consumer price index raised new alarm bells about the extent of inflation in the world’s largest economy.”

USAGOLD note: The Fed chairman made it quite clear in testimony before Congress on Wednesday that the recent inflation numbers are not enough to move the needle. No matter what, the Fed is still between a rock and a hardspot. If it raises rates or tapers, it is likely to damage markets – perhaps even severely. If it doesn’t raise rates or taper, inflation is likely to become less and less transitory and could, perhaps, even suddenly morph to the runaway variety.

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