This week’s Fed meeting is critical because the last two inflation reports have been hot, and the Fed is now at risk of losing control of the economy, the market, and inflation.
At this point, it seems clear financial conditions have eased too much, and now oil, gasoline, and copper are all surging, which will pressure inflation higher. Guess what? Inflation breakevens and swaps are all pricing in rising inflation. The Fed needs to push back against the current easing of conditions before it is too late.
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