Core inflation at 3.1% remains well above Fed's 2% target, with weak consumer spending growth of 0.1% in January.
Speaker1
Mike McKee
The Fed has faced multiple shocks: pandemic, energy prices, and tariffs. Recent data (Dec/Jan) is pre-war and shows weak spending but stronger wages.
Expresses concern that sticky inflation combined with weak GDP growth creates a policy dilemma - contemplating rate hikes would further hurt growth.
Speaker3
Mike McKee
The yield curve has flattened because bond traders are pricing in a real economic slowdown, not because of inflation expectations.
Questions why the Fed doesn't raise rates given they're 50% above target after 5 years of inflation fighting.
Speaker1
Mike McKee
Two camps at Fed: hawks think current rates are sufficient to pressure inflation, doves think policy is too tight and will hurt economy.
Mike McKee
Rest of world (ECB, BOE, Japan, Australia) facing rate hike expectations due to worse inflation impact from oil shocks.