The doldrums of August are upon us … though not really. There is the ongoing debate about inflation prompting the FEDERAL RESERVE to accelerate the pace of its asset purchase tapering — when it begins — while it is the elevated levels of minority unemployment that will likely force the FED to maintain its lower-for-longer policy.
The chatter remains about REAL INFLATION being above the FED‘s 2% mandate, a self-imposed threshold, while JANET YELLEN/JEROME POWELL discuss REAL UNEMPLOYMENT being above its mandate of maximum full employment. The central bank has promoted both mandates at times so it is difficult to deem what is REAL. It is of great interest that in the last few days KNOWN FED DOVES have taken a decidedly more “hawkish” posture. Atlanta Fed President Rafael Bostic, St. Louis Fed President James Bullard, and in Thursday’s Financial Times, San Francisco Fed President Mary Daly all raised the issue of reducing stimulus as soon as this year.