IEF - Low Price Inflation Means The Fed Will Retreat To Low Rates And Easy Money

By Frank Shostak

A softer increase in the personal consumption price index ((PCEPI)) adjusted for food and energy has likely prompted Fed policymakers to hint about a cut in the policy interest rate in the months ahead. The yearly growth of the PCEPI adjusted for food and energy, or the core PCEPI stood at 1.6% in April against 1.9% in April last year - strongly below the 2% so-called inflation rate target that was set by the Fed in 2012.

Based on the lagged money supply ((AMS)) growth rate, I suggest the annual growth of

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