Jerome was born in D.C. and educated at Princeton and Georgetown Universities. He is an attorney, investment banker, and has served in various high-level capacities to six different U.S. Presidents. So today’s flight isn’t his first. He’s looking for data. Lots and lots of data. He and the rest of the Fed kettle (that’s what you call a group of hawks) have a big decision to make next Wednesday.
They’ve been promising to raise rates another 1/2% in December with a few smaller hikes in February and March, but there are signs that inflation is cooling. You wouldn’t want to overcook things like you did in 2018 when you were a brand new Fed Chair. That hike instantly flipped markets on their ear. Oops. You’re still catching flack for that move four years later.
Hawks’ visual acuity is 8X that of humans. Today’s patrol uncovered the Core Producer Price Index, which came out showing a 6.2% rise year-over-year. That’s higher than expected and higher than the 2.5%-3.0% target rate, but the PPI has been consecutively lower for the last eight months and is now less than half the 11.7% reading last March. So that’s a mixed bag of news, but overall, pretty positive progress.
Nevertheless, given that Consumer Sentiment, Jobless Claims, Productivity, and ISM services were ALL still more inflationary this week than they were last month, the hawk thinks he should hike again. Decision made, he elects to go back inside where it’s warm. Maybe he’ll open a pack of beef jerky or snap into a Slim Jim, for which he has a particular affinity. Fresh out at home, he swoops into the c-store around the corner where he sees that the Original Flavor Giant Stick is going for $1.99. “Egregious!”, he squawks, after paying for the 1 oz stick of meat. “I definitely need to get inflation down”, he mutters as he waddles past the security camera, below the height measuring sticker, and out the automatic door. “There’s NO WAY I’m eating carrion.”
