Latest / The Federal Reserve Podcast with Fexingo: Interest Rates, FOMC Meetings, and Monetary Policy
Why the Fed Is Losing Its Best Inflation Signal
The Federal Reserve has long relied on core PCE inflation as its primary compass for rate decisions. But Lucas and Luna unpack a growing problem: the core PCE index has been rising for five straight months even as headline inflation moderates, a divergence that hasn't happened since the 1970s. They explain why core PCE is now being distorted by shelter costs that lag reality and by volatile services prices that don't reflect demand. With the ten-year breakeven inflation rate ticking up to 2.25 percent and market-implied inflation expectations creeping higher, the Fed faces a…
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