The Most Important Number of the Week Is 3.1%
A bigger-than-expected increase in inflation didn’t rattle bond traders. That probably means we shouldn’t worry either.
Rising inflation means your dollars don’t buy as much as they used to, but don’t panic.
Photographer: Bloomberg/BloombergInflation? Meh. The Federal Reserve has it under control. That was the message sent by bond traders after the U.S. Commerce Department said Friday that a key measure of consumer prices is running at its highest level since 1992. They’re probably right.
The debate over whether the recent acceleration in inflation is just transitory — as the Fed believes — or becoming entrenched is the most heated in the field of economics at the moment. The truth is, nobody can say for sure because there’s really no historical precedent for how the economy will react to trillions of dollars of fiscal and monetary stimulus during a global pandemic.