Defining Inflation Down, Continued

Yet, we have become so inured that we hear 3.5% and think the Fed is less likely to raise rates. - Yours Truly a month ago

Here we go again (CNBC).

A key inflation reading Wednesday showed prices moderating across a range of goods and services, possibly taking the urgency out of an imminent interest rate hike.

The consumer price index, part of the Federal Reserve’s inflation dashboard, showed a seasonally adjusted increase of 0.1% during July, according to the Bureau of Labor Statistics. Excluding food and energy, the so-called core CPI rose 0.2%.

On an annual basis, the inflation rates were 3.4% and 2.5%, both down 0.1 percentage point from June.

All of the readings were line with the Dow Jones consensus forecasts.

So inflation is still nearly a point and a half above normal but it was expected; so everything is “fine.” Never mind the ongoing Operation Epic FUBAR and the Great Patriotic Labor Shortage.

I wish I were kidding (same link).

Stock market futures rose following the release while Treasury yields were negative across the board. Traders further cut the probability for a September rate hike, lowering the odds to 42%, according to the CME Group’s FedWatch gauge of futures prices.

The economy has become the frog in the slow-boiling pot. The more comfortable we become with 3-3.5% inflation (versus 2%), the more likely the regime will push for 4.5-5% inflation as “acceptable” for their nativism and their ridiculous trade wars.

The American people had best not fall for this.