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Powell calls inflation too high and warns to raise rates further – CNBC

https://www.cnbc.com/2023/08/25/fed-chair-powell-calls-inflation-too-high-and-warns-that-we-are-prepared-to-raise-rates-further.html

“Federal Reserve Chair Jerome Powell on Friday called for more vigilance in the fight against inflation, warning that additional interest rate increases could be yet to come.

While acknowledging that progress, the central bank leader said inflation is still above where policymakers feel comfortable. ”

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Having listened to Powell’s speech, he mainly pointed out that core PCE inflation is still too high at 4.1%. While headline inflation is lower right now at 3%, as soon as energy (or food) prices would go higher again, something you can expect going into winter, also headline inflation will go higher again if core inflation doesn’t push back against it.

So expect more hikes. Energy prices will move higher towards winter and if core doesn’t come down drastically, overall inflation will stay high or move even higher. That’s what Powell was basically referring to. His preferred indicator is core PCE minus housing.

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Note: Fed’s own Nowcasting shows PCE for August at +0,6%, way above the number for July even when adding some room for error with their forecast.

You can find thoses numbers over here: https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting

 

h/t daydreamnoob