- 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.
For further details see:
Western Drought Could Make Some Inflation More Than 'Transitory'