Latest / The Macro Memo with Fexingo: Daily Conversations on Inflation, GDP, and Federal Reserve Policy
Why the Fed Ignores the Budget Deficit's Record Surge
On this episode of The Macro Memo, Lucas and Luna dig into the July budget deficit — the largest since March 2021 — and ask a simple question: why doesn't the Federal Reserve seem to care? They explain how deficit spending doesn't automatically fuel inflation when the economy is operating below capacity, and how the Fed's focus on inflation expectations, not fiscal numbers, shapes its response. With the 10-year breakeven inflation rate ticking up to 2.27 percent and the Fed holding rates steady near 3.63 percent, the hosts also discuss the disconnect between bond markets…
The skinny
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