Skunk of Fed Chairman Jerome Powell’s inflation rates strategy illustration by Alexander Hunter/The Washington TimesThe S&P 500 index busted through its previous record high, and the key 10-year Treasury rate dropped, reflecting optimism that the Federal Reserve would soon broadly push interest rates down.
Stripping out food and energy, core prices were up 3.6% from March to April — the same as its 12-month average. Recently, higher mortgage rates have been a problem, but the secular trend reflects the scarcity of good sites near major employment centers, NIMBY zoning regulations and labor shortages. Resale prices on single-family units are rising more than 7% a year. With that, the shelter portion of the CPI is unlikely to rescue us from inflation.All along, monetary policy has not been as tight as the task requires.
The International Monetary Fund estimates larger deficits add half a percentage point to inflation. Mr. Biden’s climate change agenda has similar consequences. Moreover, the recently approved $95 billion aid package for Ukraine, Israel and Taiwan, and Mr. Biden’s program to forgive an additional $475 billion in student debt will add to the federal deficit.