US Inflation To Head Higher In 2020
(4 min read)
In 2019 market participants have viewed moves in inflation asymmetrically. Phases of decline, although largely noise, they treated as concerning – thinking that perhaps it’s a slide into deflation (an unlikely event historically). By contrast, the recent acceleration has been largely ignored.
Primarily, this divergent perception reflects a skew on the part of FOMC policy makers. They tend to treat downside inflation surprises more seriously than upside surprises in a world where inflation has been slightly below target since it was introduced in 2012 (never mind that it was substantially above the Fed mandate of price stability for about 50 years before that).
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