Hawks vs. Bulls: The Fed Clashes With Optimistic Investors
The Breakdown
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Fed Debates Whether Wages or Low Employment Will Drive Inflation?
The Wall Street Journal's Fed Whisperer, Nick Timeros, wrote about which issues the Fed was likely to be focused on over the weekend. At issue is what's the right way to forecast inflation, a bottom-up analysis that puts more weight on pandemic-driven idiosyncrasies or a traditional top-down analysis of how far the economy is operating above or below its normal capacity. In other words, there is an acknowledgement here, even if haltingly, that some of the changes wrought by recent disruptions aren't likely to unwind anytime soon; this gives credence to those who think central bankers should put less stake in direct indicators and focus instead on wages.
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