“Oil Is The Fed’s Canary”: Is The Fed “Sleepwalking Into A Policy Mistake”?

“Oil Is The Fed’s Canary”: Is The Fed “Sleepwalking Into A Policy Mistake”?

As we and plenty of others have noted, there's a very real risk that the Fed is about to make a policy mistake by hiking into a growing deflationary impulse. We discussed this at length over the weekend in "Yeah, So The Fed Is Going To Hike Into A Deflationary Backdrop." Key to that post was BofAML's observation that "since 1957 there have been 722 overlapping two-month periods [and in] only six of these have we seen core CPI deflation — but that includes the most recent March-April period th
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4 thoughts on ““Oil Is The Fed’s Canary”: Is The Fed “Sleepwalking Into A Policy Mistake”?

  1. The Fed should give up on trying to create inflation, they are pushing on a string. Instead stick to the mandate, keep inflation low while maximizing employment. So with no problems with high inflation, and 4.3 U3 we need to have regular rates, not emergency giveaways to banks.

  2. Fed policy mistake already happened. It kept rates too low for years too long. Should have hiked way more years ago. Before they created the current “everything bubble”. Abolish the Fed and let the market set rates.

  3. And what deflation? Look at housing and food prices. And the collapsing US dollar, the weakest & worst currency in the world this year, having already rapidly wiped out 2 years gains (soon to be 3 years lost).

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