The Fed Should Not Overreact to Inflation

Consumer prices were flat in july and rose just one tenth of a % in august, with the year over year inflation rate falling to eight point two%. Despite this trend, markets reacted badly to last t Tuesday's c p i print as inflation exceeded the minus one tenth of consensus expectation. The details of the report for the month was almost entirely explained by ten point five % decline in gasolene prices. Other factors, such as an escalation or d sclation of the ukraine war, how china eventually handles covet weather events or other issues could all radically impact the short term inflation outlook.