The real inflation rate is 2.2% year over year, the Fed is just committing economic dishonesty to justify not normalizing rates. Frankly, the mainstream financial media buy this crap as if it is real, i.e., that we have a below trend inflation problem in the United States.
This is just not true as once the poor food and energy comps and the effects of a strong dollar on a year over year basis come out of the numbers, the inflation numbers are really going to jump well above average inflation trends.
The Fed will definitely become schizophrenic again, and be forced to raise rates twice the remainder of this year due to above trend inflation as energy spikes after markets rebalance for the second half of the year as many analysts expect. The EIA Oil report was actually pretty good, and illustrates that oil markets are rebalancing.
But beyond this the core inflation rate will still rise the remainder of 2016 even if energy prices just stay trading within their current range. The Fed has through slight of hand like a magician changed from using core inflation in the past when it was convenient, to now ignoring it when the artificially lower inflation metric that includes the cyclical downdraft in food and energy prices which are temporary comps makes the inflation numbers appear below their 2% target, when in fact the real inflation rate is already above 2%, standing at 2.2% – basically the Fed is lying about inflation!
Moreover, the intellectuals in the financial media bought this magician`s trick hook, line and sinker. The mainstream financial media are blatantly incompetent, and plays right into the Fed`s hand in lying about the real inflation metric that they have used for decades. Inflation is already above the Fed`s stated 2% target! This is academic dishonesty to say the least by Janet Yellen, and highly unethical in my opinion.
People should call her out on this crap! Janet Yellen acts like an innocent grandma so nobody calls her out on anything in the financial media, she is actually a wolf in sheep`s clothing. She has lost all credibility in my book, and is going to look real stupid when forced to raise interest rates by inflation the back half of 2016, when she could have raised rates at a much more gradual pace while the food and energy comps were still in her favor.
First published here: http://j.mp/1S75CzL