Inflation Expectations and the Fed

Key point:  Falling inflation expectations are positive for eventual Fed pivot prospects, but there is still a way to go yet — and still risks of inflation staying high.

Declining inflation expectations will be well received by the Fed and markets with respect to the prospects of a pivot or at least a pause in monetary policy tightening.

However, despite the decline, inflation expectations are still historically high.

Central banks the world over are going to be concerned that **even if inflation expectations might have peaked** inflation ends up anchoring higher (e.g.short-term inflation expectationsremain close to 40-year highs).

Persistently high inflation is (even more) damaging to central bank credibility and so they will want to know inflation is well and truly crushed before making any moves to pivot — despite a growing chorus begging for that to be so.

History has shown that pivoting too early can lead to resurgentinflation(which was initially thought to be on the decline) as was the case in the 1970s.

Promise of a pause? Pivot possibilities? Patience, please.

https://topdowncharts.substack.com/p/chart-of-the-week-inflation-expectations

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • LeeCWI
    ·2022-10-05
    There will always be opportunities just invest within your means. Stay safe everyone 😉
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  • Brrrrrrrrrrr
    ·2022-10-05
    Decoupling from USD, just like how they teach not to put your eggs in one basket
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  • Jurong East
    ·2022-10-05
    data already shows inflation is coming down. Question is coming down by how much
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  • smee
    ·2022-10-05
    agreed with your views!
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  • tunu
    ·2022-10-06
    心跳的节奏
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  • psk
    ·2022-10-05
    thanks for yr insight
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  • ReneS
    ·2022-10-07
    Good
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  • SPOT_ON
    ·2022-10-07
    ok
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  • jayc
    ·2022-10-07
    👍
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  • Andy Fong
    ·2022-10-06
    Ok
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  • Petergui
    ·2022-10-06
    thanks
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  • 步步為營
    ·2022-10-06
    🤔
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  • Punk_dy
    ·2022-10-06
    Good read
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  • Oyh
    ·2022-10-06
    Ok
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  • Fyf
    ·2022-10-06
    OK
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  • TKCat
    ·2022-10-06
    👍
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  • BOMW
    ·2022-10-06
    ok
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  • nandha04
    ·2022-10-06
    👌
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  • jaswsf
    ·2022-10-05
    Good
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  • Louisyeo
    ·2022-10-05
    Ok
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