FOMC: Not Enough Inflation, Folks

By: Gary Tanashian of

Not enough inflation.  That’s what the Fed is saying yet again.

FOMC Statement

“Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months”

The problem is, that like their innovative friends at the BoJ, which apparently thinks it is going to now engineer the Japanese yield curve into an inflationary environment, the US Fed is too heavily involved in the Treasury market.  So I ask you if just maybe the signals they are looking for in bonds are all screwed up by their very presence in bonds, 24/7 and 365 since 2008?  Hello Op/Twist…

So the TIP-TLT gauge and other market measures are not showing an ‘inflation expectations’ problem yet.  Big deal.  Costs and prices are firm across whole swaths of the economy.  Healthcare, Professional Services, Housing and much to the suddenly lucid Eric Rosengren’s (he voted to hike today) consternation, Commercial Real Estate… all ramping ceaselessly.

So the Fed is noting that “market based” inflation signals are not registering.  Big effing deal.

tip and tlt ratio

Here are the good people (or show ponies?) on the FOMC who voted to raise rates…

“Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.”

Subscribe to NFTRH Premium for your 30-45 page weekly report, interim updates and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at and Also, you can follow via Twitter @BiiwiiNFTRH, StockTwits or RSS.

7 thoughts on “FOMC: Not Enough Inflation, Folks

  1. Bad Debit has to be wrung out! Government interfers too often and the consequences get worse! You want to go back to Nixon's freeze? What happened after the government stepped aside... the laws of nature swong back! The is no way to prop up economies for ever!

    Whip inflation now! By letting the natural course run! A war against busines is what has gone on
    for nearly 8 years! Get the government out of the way anf you will see REAL GROWTH sooner!

    1. Correctiom 'THERE is no way to prop up economies for ever"

      Jobs are going to be lost soon because of the "FAKE Economy". Qe's and the printing
      of money did nothing for the unemployeed it JUST hid the real problems. How many of the
      last 8 years produced part-time workers? 2 or 3 jobs per person to make ends meat??? Health Care taxes
      that provide no insurance but lost jobs.

      That's the reality! Keep an EYE on the Metals!

  2. the feds job is not to help the debtor, and punish the saver. (but that is what they have been doing).
    they need to normalize their balance sheet, and immediately raise short rates up to 2%, and hold them there.
    yes, they would be a big adjustment by the markets, but this would be very healthy.

    1. But 500K/mo. losing jobs would not be a good thing, not to mention what a fifteen percent higher dollar would mean.

    2. "the feds job is not to help the debtor, and punish the saver." That's not their game and never was. It is to provide virtually-interest-free money to the very banks that own it (ditto the other central banks) and as long as they can get away with it through the expansion of the national debt, they will do so, and in th process score the twofer of using the minuscule rates that only they enjoy to justify denying savers any return whatsoever.

Comments are closed.