Outlook: The US economy remains resilient and fairly robust. But a low reading in PPI and/or CPI this week might re-ignite doubts about the Fed’s resoluteness, even if the vast majority think the Nov 3 policy meeting brings 75 bp come hell or high water. It’s a small and temporary risk to the dollar. Today Chicago Fed Evans and Vice Chair Brainard speak about “Restoring Price Stability in an Uncertain Economic Environment” at 1:35 pm ET. There’s a webcast if you need a nap.
The problem with the outlook for the Fed is that we cannot know how much it respects The Lag. It claims to be data-dependent but surely all those brainy back- office economists are factoring in that the data is terribly backward-looking, and by more than one month. That puts the Dec 14 policy meeting covered in question marks–as it should.
By the time of the Dec meeting, the Fed will have two more sets of data in jobs, inflation and…
