Don't Be Fooled: Despite Lower Odds of a September Fed Rate Hike, One Sinister Inflation Metric Remains Problematic
Fed Chair Kevin Warsh and the Federal Open Market Committee (FOMC) have a "core" dilemma.
Overview
Although corporate earnings typically hog all of the glory on Wall Street and drive movements in the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC), monthly inflation reports have taken on added significance since March. The combination of President Donald Trump's tariffs and the Iran war sent inflation screaming to a three-year high of 4.2% in May. The prospect of the Federal Reserve taking action amid a historically pricey stock market is a concern for all investors.
On Wednesday, Aug. 12, the July inflation report eased worries about a September rate hike. Nevertheless, the central bank's own inflationary forecasts point to a sinister metric that remains highly problematic.
Fed Chair Kevin Warsh has a "core" problem on his hands. Image source: Official Federal Reserve Photo.
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Originally published at www.fool.com.