Inflation and yield Monetary policy

Let’s trust the Fed

I think the assessment of inflation transitory by the Fed is correct but the time line of that dynamics was not quite understood by the public. Inflation dynamics is of a year or more, not a few months. Some of the market players took the opportunity to attack the Fed and I think they are wrong by saying that the Fed has made a misjudgment on the nature of the current inflation. I believe chair Powell will make it clearer this Wednesday why he decided to retire “transitory” word and he will disconnect rake hikes, if any next year and inflation concerns. Yes, tapering will be accelerated but that is to remove monetary stimulus that could worsen inflation due to supply constraints down the road. It is too early for much momentary tightening given that the economy remains recovery mode that shows no indication of overheating.

By playing odds, we should trust the Fed more than any one else, including those who have been not qualified for any positions in the federal reserve system.