Economics
Powell Fails to Convince Inflation Traders With ‘Transient’ View
- TIPS breakeven rates sink in wake of Fed chief’s comments
- Market gauges of inflation expectations had nearly topped 2%
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The Federal Reserve is between a rock and hard place, at least as far as buoying inflation expectations, which officials have stressed are crucial to generating actual price increases.
While policy makers want bond-market gauges of the anticipated path of consumer prices to rise, they’re sinking across the board in the wake of Fed Chairman Jerome Powell’s post-meeting comments Wednesday. His view that tepid inflation readings were the result of transitory factors led rates traders to trim bets that the Fed would cut rates this year and stimulate inflation.