TIPping Points?

This is a syndicated repost courtesy of Alhambra Investment Partners. To view original, click here. Reposted with permission.
The Federal Reserve’s complete change last year wasn’t something that happened all at once. There were several hints that a lot was going on behind the scenes that may never become public, including five years (now four) down the road when the full policy transcripts are released to the public. There was more interest in R* and secular stagnation, for one, as well as changing thoughts on inflation expectations.
The latter has been an important topic for policymakers all along, but more so going back to early 2012. After all, by last March the PCE Deflator hadn’t registered 2% in compliance with the Fed’s mandate for four years at that point despite massive additional balance sheet expansion ($1.7 trillion through QE3 and QE4). Through it all, maintaining that it wasn’t but a ‘transitory’ concern, Janet Yellen in particular remained steadfast that long run inflation expectations (anchor) had not changed.

This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ April 21, 2017.