The Federal Reserve yesterday released the minutes of its March 20-21 FOMC meeting and confirmed the worst-kept secret in finance and economics: inflation’s still a problem. Or a concern. Or something.
Anyone who’s taken the time to look at the numbers dutifully released by the government each month already knows that there’s reason to wonder if the price of money might rise again to fight any resurgence of the dark enemies of price stability. Notably, the core CPI (which excludes food and energy) shows no sign of moderating.
For good or ill, the Fed pays close attention to core CPI, and so the future path of interest rates may very well be determined by this inflation gauge. With that in mind, over the 12 months through February, core CPI rose by 2.7%. Not only is that near the highest level in years, it’s also well above the Fed’s comfort zone. “On a twelve-month-change basis,” the Fed minutes advised, “core CPI inflation in February was considerably above its pace a year earlier, largely because of a sharp acceleration in shelter rents over the past year.”