It’s amazing how the same set of economic data can create two very different opinions on the overrated Fed Funds hike issue. In two Bloomberg opinion pieces last week, we see the stark difference:
Tim Duy: It’s Way Too Early for the Fed to Consider a March Rate Increase
Charles Lieberman: The Fed is Behind the Curve
To make their cases, both cite the employment numbers and the consumer price inflation rate. Duy states that the Fed wanted the unemployment rate to be around 4.5 percent, but it’s still at 4.8 percent. So allegedly, it’s got “room to run.” Lieberman looks at the unemployment on a broader timeframe and concludes that the current levels have “historically been universally regarded as full employment.”
On price inflation, here is Duy: “Core inflation, as measured by the Fed’s preferred price index, was running at just 1 percent on an annualized basis in the final three months of 2016.”
And then Lieberman states that price inflation is already above 2 percent “for all the primary inflation measures, except the Fed’s preferred measure, the core personal consumption deflator, which may also soon rise above 2 percent.”
This post was published at Ludwig von Mises Institute on February 21, 2017.
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