I'm trying to reconcile the Fed's earlier 'transitory' stance on inflation with the recent CPI numbers. It feels like we're constantly hearing about sticky inflation, but then also arguments for why it'll come down. What am I missing in connecting these dots when looking at $CPI reports and the market's reaction?
Yeah, it's a tough one. I think a lot of the 'transitory' talk was based on specific supply chain issues they thought would resolve quickly, but other factors like wage growth and energy prices have proven more stubborn. It's almost like there are different types of inflation at play.
It's not just you. The 'transitory' narrative didn't age well, and now the arguments for softening inflation often hinge on lagging indicators or wishful thinking about supply chain normalization. The market seems to be pricing in continued stickiness, despite the Fed's commentary.