So ends the view that inflation is tamed

 

So ends the view that inflation is tamed and rates should fall. The PPI is accelerating and moving back to the type of supply shocks that we saw post-pandemic. The CPI is also heading higher and moving further away from the target with a 3-handle. There is no room for a Fed rate cut, and with real rates now near zero, there is a strong case for a rate increase. 

We do know what the Fed hates - supply shocks. Monetary policy is a tool that is not built for supply shocks, yet here we are.