Taps Coogan – January 14th, 2023
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The following chart, via Nick Reece, shows that the 6-month headline CPI rate is now just 1.9%, down from over 11% last summer.
All of the leading indicators of inflation that we constantly talked about in late 2020 and 2021, the indicators that pointed to higher inflation (here, here, here, here, here, here, here, here, etc…), now point to disinflation. Shorter term measures of CPI, like that shown above, are already below the Fed’s 2% target and usually lead the widely referenced year-over-year number.
The irony of the Fed’s crusade to see how high they can get rates before blowing everything up is that it is going to ultimately lead to a return to excessively accommodative policy.