Friday Brace for Impact Charts
On Monday, NASA completed a successful test of its ability to keep us safe from asteroids: Its DART rocket made impact with the asteroid Dimorphos, just 17 meters off the bullseye after a 6.3 million mile journey.
The Fed is similarly firing rate hikes at the inflation asteroid, but with far less precision: It increasingly looks like they are going to miss the intended target and hit the global economy instead.
That's because monetary policy is even more experimental than asteroid-seeking rockets — there's a lot less math involved in and a lot more guess work.
Do we know for sure that rate hikes lower inflation? Do recessions even lower inflation?
Reasonable economists disagree on those basic points. But the Fed is determined:
"We need a slowdown," Atlanta Fed President Raphael Bostic said last weekend. "There's no question about that. But I do think that we're going to do all we can at the Federal Reserve to avoid deep, deep pain."
I do question that, actually. But it's good to hear we only have deep pain to look forward to and not deep, deep pain.
This morning's data won't deter them: Core PCE was reported up 4.9% YoY, 0.2% hotter than consensus.
Most of the rest of the world would call that downright cold, however: The Netherlands reported this morning that August consumer prices were up 17.1% YoY.
In Argentina, it's 78.5%.
Europeans and South Americans are already feeling the pain, and the Fed's rate hikes are helping push them to the breaking point.
How much longer will the Fed be firing rockets at everyone?
Let's check the charts.
The next CPI print will still be too high:
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