The Breakdown What the CPI Says About The Fed's Next Moves
Sep 13, 2024
Markets are buzzing with confusion over the latest Consumer Price Index data. Key insights are shared on how inflation trends will shape Federal Reserve policy decisions. The podcast dives into the impact of shelter inflation and shifts in inflation expectations, revealing a long-term estimate of 2%. Interesting discussions also surface around how these dynamics affect market behavior and investment strategies amidst economic uncertainties.
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August Inflation Data
- August inflation data slightly exceeded predictions, complicating the Fed's rate decision.
- Headline CPI rose 0.2%, matching July and aligning with inflation targets, reaching its lowest since February 2021.
Housing Impact on Inflation
- Housing costs, a third of the CPI, rose 0.5%, driving 70% of the overall CPI increase.
- This surge, the largest this year, raises skepticism about housing inflation measurement methods.
Core CPI Excluding Shelter
- Excluding shelter, core CPI shows a significantly lower inflation rate.
- The Fed might consider shelter inflation an anomaly due to limited tools for direct intervention.