IBTK - Western Drought Could Make Some Inflation More Than 'Transitory'

• The “mega-drought” out West is expected to cause electricity prices to rise due to hydroelectric power plant output falling, being rationed, or possibly shut down.
• Higher food and electric prices may be “transitory,” as the Fed has asserted, but this “transition” may not be dissipated until the weather cools in the fall.
• The Fed will remain accommodative, and the Goldilocks environment of low interest rates and strong earnings growth will likely persist for the foreseeable future.

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