Despite a rise in overall inflation because of higher oil prices, core inflation and spending volume were softer in August, adding to the optimism projected by the Federal Reserve recently that the economy can achieve a soft landing. The personal consumption expenditures price index—the Fed's preferred ... READ MORE >
Inflation
FOMC policy decision: No rate hike as Fed implies soft landing
The Federal Reserve maintained its policy rate in a range between 5.25% and 5.5% on Wednesday while revisions to its Summary of Economic Projections strongly imply that the central bank no longer expects a recession, which it did just six months ago, and is increasingly confident of a soft landing in the ... READ MORE >
Canada inflation surges 4%, exceeding forecasts
Inflation in Canada spiked far more than forecast in August, raising the prospect of another interest rate increase by the Bank of Canada. Even though inflation was expected to increase because of rising gas prices, higher rents and comparisons to the moderate levels of a year ago, the 4% ... READ MORE >
Low core inflation should keep the Fed from hiking rates
While we expect the Federal Reserve to hold rates unchanged on Wednesday, what its updated Summary of Economic Projections will look like remains less clear. More likely than not, given the recent robust economic data, we might see higher growth and inflation reflected in the summary along with an ... READ MORE >
R-star: The role of the natural rate of interest in monetary policy and economic growth
The pandemic has spurred profound changes in the global economy like a tight labor market and elevated inflation that policymakers are only beginning to understand. But one result is clear: The days of historically low interest rates are over. Now, policymakers are wrestling with the question of ... READ MORE >
August retail sales and producer inflation show a hot summer finish
The U.S. economy ran hotter than expected in August even as the momentum in spending slowed down. Retail sales and producer inflation came in significantly higher than forecast, while initial jobless claims were lower than the market consensus. But the downward revisions to retail sales in the prior ... READ MORE >
Energy pushes inflation higher but core prices remain grounded
Consumer inflation in August posted the biggest monthly increase in more than a year, driven mostly by the surge in oil and energy prices, the Bureau of Labor Statistics reported on Wednesday. But core inflation—which has more policy implications—grew slightly faster at 0.3% or 2.8% on a ... READ MORE >
Why the Fed should lift its 2% inflation target
We think that the Federal Reserve’s current cycle of rate hikes has peaked at a range between 5.25% and 5.5%. While inflation stands well above the Fed’s official 2% target, we think that because of the economic and political shocks since the pandemic, the Fed will raise its inflation target in the ... READ MORE >
U.S. August jobs report: Labor market continues to cool
Cooler air permeating the nights as summer comes to an end is a perfect metaphor for an American labor market easing from the historically tight conditions of the past few years. In August, the U.S. economy added 187,000 jobs and the unemployment rate settled in at 3.8%, according to Labor Department ... READ MORE >
Personal spending grows hot in July as inflation stabilizes
American consumers remained in a position of strength on spending and income growth this summer as inflation stabilized further and the labor market stayed resilient. July's personal spending surged by 0.8% while personal income grew by 0.2%, the Bureau of Economic Analysis reported on Thursday. With ... READ MORE >