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Oh that “Elusive” Inflation!

Courtesy of Mish.

New York Fed President, William Dudley, says 2% inflation target will remain elusive even if price pressures pick up.

Elusive means “6-10 months”.

Inflation is not likely to reach the Federal Reserve’s 2% annual target this year even if monthly data begins to pick up as expected, said William Dudley, president of the New York Fed, on Thursday.

“I do think inflation to start to move higher in the medium term, but probably not get all the way back to sort of 2% on a year-on-year basis,” Dudley said in remarks to reporters at his bank’s headquarters near Wall Street.

Low inflation readings since February will continue to weigh on the index until next year, he said.

“We’re not going to get to a year-over-year number of 2% until some of these very low readings drop out of the statistics six to ten months from now,” he said.

Dudley predicted the tight labor market combined with the weaker dollar should begin to foster upward inflation pressure soon.

Dudley Right on Cue

Dudley was right on cue today given that Producer Prices Unexpectedly Declined.

Transitory Factors to Continue

The Fed, at least Dudley, now believes transitory factors will continue for the rest of 2017 or so.

“Idiosyncratic and Transitory Factors”

On August 2, I noted “Idiosyncratic and Transitory Factors” Holding Down Inflation.


Continue reading here…


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