Jun 10, 2021 4:37 PM

Goss: Fed between 'rock and a hard place' with high CPI number

Posted Jun 10, 2021 4:37 PM


Hutch Post

HUTCHINSON, Kan. — Creighton University economist Ernie Goss says the Federal Reserve has a problem as the growth rate of the Consumer Price Index released on Thursday is strong, but it may be too strong. The CPI rose 5% from a year earlier.

"Some of that is transitory, but I think a lot of it is not transitory," Goss said. "We're going to be stuck with high inflation moving forward. That's certainly not what the Federal Reserve wanted, but that's what they're going to get. We're seeing even the core rate of inflation that excludes food and energy was up briskly over the last 12 months and over the last several months."

The Federal Open Market Committee meets next week.

"They're stuck between a rock and a hard place right now," Goss said. "They really, in my judgment, should begin raising rates a bit. They're limited in that ability because, if they do that, then employment will certainly not get back to pre-pandemic levels."

Goss said they could begin tapering their purchases of U.S. Treasury bonds, as well.

"If this is truly transitory, then the Federal Reserve will be okay," Goss said. "If it is not transitory, the Fed will not be okay and we consumers will not be okay."

The next big number to come out will be the jobs number released just before the Independence Day holiday.

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