Although the Fed raised its headline inflation expectations this week to 3.4%, a full percentage point higher than the March projection, their post-meeting statement stood by its position that inflation pressures were “transitory.” The raised expectations come amid the biggest rise in consumer prices in about 13 years.
In the Fed Statement, they now say that they are thinking about starting to raise interest rates next year. Maybe even two increases next year. However no change (yet) in their bond buying program of adding $120 Billion each month to their balance sheet.
The Fed is hoping and praying that these inflationary pressures will abate over the summer months. Other observers believe, as do I, that they are “behind the curve.” That means that the inflation problem is spreading much faster than they realize, or are willing to admit.