The Fed is “Resolute” in Fighting Inflation

Last week 4 Fed members spoke and said they “are resolute and completely united” in fighting inflation and raising short-term rates and the Fed is nowhere near done fighting inflation. Charles Evans said a 50 bp rate hike in September would be appropriate, but a 75 bp increase may be needed. James Bullard wants to see the Fed raise rates by another 1.50% this year. Loretta Mester expects slower economic growth this year. None of the 4 believe we are in a recession currently due to the incredibly strong jobs market.

San Francisco Fed President Mary Daly said on Sunday that the Fed will “absolutely” raise interest rates by ½% in September. She also said she doesn’t see that inflation is embedded in the economy. This comes from someone who repeatedly said last year and earlier this year that inflation was transitory. I will bet anyone $100 that she is wrong again. Do I have any takers?

Finally, the July Consumer Price Index report will be released Wednesday morning. This July’s number will replace last July’s monthly inflation reading of 0.5% and if this July’s monthly inflation reading is over 0.5% the annual inflation rate will increase above last month’s high of 9.1%.