- When the Fed talks about fighting inflation, it is important to understand that it is talking about core inflation.
- What the Fed hopes is that by raising rates, it can influence consumer demand in such a way as to bring down price levels for a broad range of goods and services outside those two volatile categories.
- Although credit risk spreads have trended up recently, the spread between 10-year Treasuries and low-investment grade corporate bonds is still below its three-year average.
For further details see:
What The Fed Can (And Cannot) Do About Inflation