Tim Duy, Columnist

Inflation Isn't Cooperating With the Fed

Weak data could change the course of rate hikes.

May 18, 2017 at 10:15 AM UTC

Tim Duy is a professor of practice and senior director of the Oregon Economic Forum at the University of Oregon and the author of Tim Duy's Fed Watch.

Not quite.
Photographer: Valerie Macon/Getty Images

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The Federal Reserve can’t catch a break on the inflation numbers, which are simply not helping in its drive to normalize monetary policy.

Monetary policy makers have three possible responses to the weak inflation data. First, they can define down the extent of an acceptable miss on their target. Second, they can dismiss the numbers as transitory and focus instead on full employment. Third, they can rethink their estimates of full employment and the subsequent implications for the path of interest rates.