Benjamin Cole | The U.S. Federal Reserve is tightening its noose on the U.S. economy, despite being below its 2% PCE inflation target, and despite the sluggish wages that define the American job scene: real hourly wages are down in Q1 (the latest reading) and are up 3.1% in the last 10 years.
US inflation target
Benjamin Cole via Historinhas | Thanks to the extraordinary insights of blogger Kevin Erdmann, the issue of US housing costs and inflation has been brought into better focus. Erdmann recently brought up manufactured housing, or house-trailers, a wonderful topic.
BARCLAYS | In our view, achieving the FOMC’s target of 2% PCE inflation may require a substantial undershoot on the unemployment rate ( to 4% if not below ). Should the unemployment rate remain near current levels or should inflation expectations drift lower, the FOMC would be unlikely to hit its inflation target over the foreseeable future.
What really shocked the markets was not the Fed’s decision to maintain zero interest rates for a few more months, but the statement that accompanied it.