“The Whites of Their Eyes”
CEA Chair Phelan on the need for a 50 bps increase in the Fed funds rate, given the hot CPI readings today, contra Waller and Logan (Bloomberg): Christopher Phelan, chairman of the White House Council of Economic Advisers and a former adviser to the Minneapolis Fed, said there’s no case for a half-percentage point move […]
CEA Chair Phelan rejected calls for a 50 basis point increase in the Fed funds rate, citing the recent surge in CPI readings. He stated, "I’ve always followed the Revolutionary War doctrine of don’t shoot until you see the whites in their eyes," implying that a rate hike is not warranted at this time. Phelan's stance contrasts with that of Waller and Logan, who advocated for the move.
The PCE deflator and core PCE deflator nowcasts as of today are presented in a graph, showing the blue and red lines representing the respective values. The PCE y/y inflation nowcast has been revised upward from 3.77% to 3.81%, while the core PCE inflation nowcast has been revised from 3.20% to 3.21%. Both values are currently above the PCE deflator target of 2%. Market reactions are not specified in the source material.
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