Our own belief remains that while core inflation could well inch up in the coming months, it is unlikely to accelerate significantly. |
People were expecting the worst and I think the reaction you saw is that it wasn't as Draconian as many had feared. There wasn't any real hard table pounding or anything in the minutes that pointed to a 50-basic point hike at the next meeting. |
Refinery shutdowns will have a big impact on gasoline prices, ... and that's a tax on consumers. |
Rumblings at the producer level will help keep Federal Reserve officials highly attuned to the inflation situation and will cause them to continue to tilt to the side of tighter policy. |
The big question now is how much companies will be able to raise prices for finished products to offset the hit to profits from higher unit labor costs. |
The economy seems to have a decent amount of momentum at the moment. |
The Fed comments were fairly unsurprising. They indicated that there is more tightening ahead, and that the pace will be determined by upcoming data. |
The Fed is not going to raise rates right away, even if the March numbers are really strong. They are going to wait until they get several months of very strong numbers, and for people to start really feeling that the labor market is improving before they raise rates. |
The Fed isn't going to get exited about inflation in the labor market. At this stage they are focusing on core inflation at the consumer level and growth. Certainly, the news lately on the growth side has been quite good. |
The Fed tipped its hat to the fact that growth has slowed a bit, and blamed it on energy prices, |
The Fed will be keeping a close eye on wage data in the coming months. |
The information in the report is considered dated because the current focus is on the extent of the damage to the nation's energy and trade infrastructure and therefore on the lasting nature of the effect Hurricane Katrina. |
The January blowout was no doubt mostly a function of record warm weather enticing shoppers out of their homes in much greater numbers than normal for the month. |
The national labor market numbers are being skewered by the hurricanes at the moment and it's going to be a few months before we get a clean read. |
The strength in manufacturing is increasingly tied to strong demand for exports as well as reasonably good domestic demand. Other economies are doing well and we've still got reasonably good economic growth and inventory rebuilding in the U.S. |