Federal Reserve Chairman Powell sees 1970’s style inflation, as very unlikely, because of the central bank’s commitment to price stability.
He pointed to the significant decline in the price of lumber these past weeks, suggesting that recent increases in inflation measures, were “transitory.”
Meanwhile, the price of oil, a leading inflation indicator, rose to $73/barrel, continuing this year’s 52% price surge.
Although the majority of professionals agree with Chairman Powell’s assessment of the inflation outlook, we see signs that inflationary forces are much greater than being considered by the pros. We think the inflation outlook by the Fed may be “wishful thinking.”
Our question for the week: Are we going to see more evidence of inflation, over the coming summer months? And what will the consequences be for the stock and bond markets?