Rebel Capitalist News
New CPI Data Released...Will The Fed Stop Cutting Rates?
Nov 13, 2024
Inflation is back on the radar with new CPI data suggesting a surge. The discussion dives into how this might sway Federal Reserve policies, especially regarding interest rates. Skepticism about central planning emerges as they explore housing prices and the unpredictable nature of banking behaviors. The team emphasizes the importance of money supply in understanding future inflation trends, making it a fascinating look at macroeconomic forces at play.
30:06
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Quick takeaways
- The recent CPI increase to 2.6% raises doubts about the Fed’s potential pause or further rate cuts, particularly influenced by rising shelter prices.
- Despite nominal wage gains, the minimal real wage increase highlights the erosion of consumer purchasing power, suggesting future economic growth may slow down.
Deep dives
Impact of Rising CPI on Fed Decisions
The recent increase in the Consumer Price Index (CPI) to 2.6% year-over-year has raised questions about the Federal Reserve's future actions. After previously cutting rates by 75 basis points, there is uncertainty about whether the Fed will pause or initiate another rate cut in December. This situation compels analysis of inflation trends, emphasizing that core CPI, which saw a 0.3% acceleration for the month, is significantly influenced by shelter prices, which constitute about 30% of the CPI. If housing costs continue to rise, it could push CPI figures higher, potentially complicating the Fed's goal of stabilizing inflation around their 2% target.
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