Inflation Persists

Fed's Options Are Unenviable

The Cleveland Fed’s Median CPI data typically gets released a few hours after the CPI report from the BLS hits the newswires. By then the inflation stories have already been written. But the median CPI (and other “central tendency” measures of inflation) have been shown to do a better job of discerning the underlying trend inflation than the more popular (and oft-quoted) headline and ex-food & energy indexes.

The February data shows the 12-month in the Median CPI rising to its highest level ever. The 3-month change is reaccelerating and just shy of last year’s peak. If the Fed is fighting inflation, it’s raising the fed funds rate by 50 basis points next week.

With inflation as persistent as it has been, the Fed can ease up and hope for the best or, in Powell’s words, “finish the job.” Neither is an attractive option in the current environment.