#inflation

The Fed held at 3.50-3.75% for a fifth straight meeting, but the vote was 9-3 and all three dissents wanted a hike. That is the most dissents since 2016. Underneath it is a question the Fed has openly admitted it cannot answer yet, and it has commissioned task forces to go find out.

Fed Chair Kevin Warsh said inflation risks have come down and markets rallied. But the June dot plot has nine of eighteen officials penciling in a hike, and futures still price one by September. The market is not front-running cuts. It is front-running the absence of a hike, and calling that a pivot.

Inflation is the slow decline in what a dollar buys, tracked by the CPI. Here is what causes it, why the Fed targets 2%, and why sitting in cash is a quiet, guaranteed loss.