by Mike Maharrey
GoldSeek
Are we heading for a repeat performance of the resurrection of inflation that we saw in the mid-1970s?
It sure appears to be set up that way.
The Federal Reserve declared victory over price inflation over the summer when it began rolling back its balance sheet reduction. In September, it took another step, initiating a supersized 50 basis point interest rate cut, followed by additional cuts in November and December.
At the time, I said it wasn’t a victory. It was a surrender.
I’ve been arguing for months that the central bank never did enough to slay price inflation. The trajectory of the CPI in recent months seems to bear this out. After dropping as low as 2.4 percent on an annual basis in September, the CPI has crept up for the past three months and stood at 2.9 percent in December. Meanwhile, core CPI has been mired around 3 percent since last summer. It’s clear that inflation isn’t dead.
It’s sticky.