U.S. Inflation Remains Stubbornly High, Posing Dilemma for Fed on Further Rate Hikes
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U.S. inflation may stabilize above Fed's 2% target through March, posing challenge for further rate hikes.
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Markets expect high inflation readings of 3%+ for 10 straight months, but core inflation is more important to Fed policy.
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Fed seems willing to wait and see on inflation before hiking rates again, needing acceleration to 0.3-0.5% monthly core rate.
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Supply chain improvements and increased labor force size seen as disinflationary forces by Fed, reducing need to slow demand.
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Reliance on supply gains to reduce inflation without hurting growth has limits, risks higher inflation expectations if unresolved.