News & Insights

Fed Treasury Codependence, Copper Rocking, and Troubling Signs for Labor?

In its attempt to be more transparent, the Federal Reserve has been forced to change its messaging when its forecasting efforts have come up short. Currently, inflation is public enemy number one, with Fed Chairman Jerome Powell declaring the Fed is well along the path of slaying the beast. However, recent reports of persistently high inflation, rising short-term inflation expectations and the employment cost index all coming in hotter than expected this year belie claims of progress. The Fed’s recent decision to reduce its balance sheet more slowly will ease financial conditions and facilitate, although not explicitly, the federal government’s continued profligate deficit spending, exacerbating the very inflation the Fed is responsible to quell.