Biden's Inflation Crisis Hurtles Towards Make-or-Break Moment
Wednesday's CPI Data to Determine if Fed Missed the Boat Again
The stakes couldn't be higher for the Biden administration as July's consumer price index data is released Wednesday morning. With the White House under fire for its failed efforts to control raging inflation, the pivotal CPI report will likely determine if the Federal Reserve acted too slowly once again in addressing spiking prices.
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Belated Signs of Progress After Disastrous Policy Missteps
Under President Biden's watch, the U.S. has suffered the worst bout of inflation in over 40 years, hammering consumers and businesses. The Fed's conservative critics have lambasted the central bank for being asleep at the wheel as prices spiraled out of control in 2021 and 2022. Only now are there mounting signs of disinflation finally emerging after a series of aggressive interest rate hikes.
Markets Bet on Imminent Fed Easing Despite Lack of Clarity
Remarkably, financial markets have grown convinced the Fed will soon start cutting rates, despite mixed signals on whether the inflation crisis is truly under control. Traders are pricing in certainty of a rate cut by September, with many betting on a larger 50 basis point move. Some economists contend declining prices and rising unemployment strengthen the case for quick easing - even as Biden officials lack a cohesive plan.
Pivotal Data to Determine if Crisis Plan is Needed
Wednesdays's CPI data will likely be the deciding factor on whether such hopes for imminent Fed easing are warranted or premature. A continued disinflation trend would seemingly justify the market's dovish pivot expectations. However, a resurgence in inflation could force a rethink of those aggressive easing bets - and raise calls for more drastic crisis policy action by the White House.
Biden Policy Agenda on the Line in 8:30am Report
For a Biden administration reeling from self-inflicted economic wounds, the CPI release looms as a potentially pivotal data point. Consensus expects modest 0.2% monthly increases for both headline and core inflation. Any meaningful upside surprise would crush the case for swift Fed easing and intensify pressure on Biden to change course on policies blamed for inflaming price pressures. The stakes for the administration couldn't be higher when the BLS releases the data at 8:30am EST.
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The Fed's next move is about to have a similar ripple effect on ordinary folks across America.
This event could dictate the next decade of every American's financial life, and it's critical that you take steps now to prepare.