Federal Reserve Chair Jerome Powell on Tuesday warned of rates remaining higher for longer but qualified the April producer price inflation report as mixed. More importantly, he reassured the next rate move will unlikely be upward. Economist Peter Schiff, an inflation hawk, took a swipe at Powell’s stance.
What Happened: Powell refused to acknowledge that the Fed’s easy monetary policy during the COVID-19 pandemic was a mistake, said Schiff in a post on X, formerly Twitter. “It resulted in the current inflation problem,” he said.
A section of economists have blamed the central bank squarely for not acting quickly enough when stimulatory policies following the pandemic stoked inflationary pressure.
The Fed fund rate was brought down to near zero to nurse an economy ailing with the effects of the pandemic.
Consumer price inflation peaked at 9.1% in June 2022 from its cycle low of 0.1% in May 2020. After a drop to 3% in June 2023, the downtrend has stalled.
See Also: Best Inflation Stocks
Northward Bound? Schiff said he expects the inflation to grind higher yet again. “Since the #Fed doesn’t understand its own mistakes it’s sure to repeat them. Therefore Inflation is headed far higher,” he said.
The April inflation report due shortly will offer some clues regarding the accuracy of Schiff’s statement. The annual rate of core consumer prices is expected to ease from 3.8% in March to 3.6% in April.
The iShares TIPS Bond ETF TIP, an ETF tracking the investment results of an index composed of inflation-protected U.S. Treasury bonds, rose 0.19% at $106.49 in premarket trading, according to Benzinga Pro data.
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