The inflation “debate” that inundates Twitter (nowX) is hysterical! The level of detail on inflation components that people go into is damning to any resonable analysis.
Speeches by FOMC members are not enlightening, and recently they have mostly been geared to “push-back” agents expectations for the first date the Fed Funds rate will experience the first cut, and I don´t discard the possiblity that one or two may think further “tightening” might be necessary!
In a speach on February 15, Raphael Bostic, president of the Atlanta Fed said:
Bostic says he is grateful for substantial progress toward price stability, yet vigilant because the fight against inflation is not finished.
and concludes:
But from my vantage point, the evidence from data, our surveys, and our outreach says that victory is not clearly in hand, and leaves me not yet comfortable that inflation is inexorably declining to our 2 percent objective. That may be true for some time, even if the January CPI report turns out to be an aberration. So that gratitude will be accompanied by vigilance, and I will be ready to do what it takes to achieve our monetary policy mandates.
“Gratidude” to whom? (God?) and “Vigilant” against whom? (the Devil?)
The fact is that ex-shelter (mostly comprised of Owner Equivalent Rents (OER)), both headline and ex-shelter CPI have been declining fast, with ex-shelter CPI remaining below 2% since mid-2023. The chart illustrates.
By looking at the chart, one might think that shelter/OER inflation is “stubborn”, when in fact it is not a real estimate but mostly a guesstimate! And “guesses” tend to fall far behind reality, especially when reality is changing fast.
Bostic should be “grateful” for the Fed doing the right thing, “vigilant” against the Fed making mistakes and hopefully “grateful” again for the Fed not getting “distracted” by the “siren song of inflation hysteria!”