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Powell Opines On Asset Purchases, Waller Says Economy ‘Ready To Rip’

Federal Reserve Chairman Jay Powell gave markets an important morsel this week when he opined on the timing of when the Fed would taper asset purchases in relation to when it would raise rates. He clarified that the world’s most important central bank will slow the pace of its bond purchase “well-before” it decided to raise rates. He spoke at the Economic Club of Washington DC. The comments came only a day after the Labor Department came out with its inflation numbers. The CPI saw the biggest one-month jump since 2012. Worry not say most Fed officials. This inflation will be transitory and remember, the secular deflationary forces we have been facing for the last decade seem unlikely to ‘turn on a dime’.

The Fed released the Beige Book which is an informative economic survey across the different regions covered by the respective Regional Banks. Businesses reported one of the main sources of costs was supply-chain disruptions. Obtaining shipments from overseas in a timely and cost-effective manner is becoming problematic. The report found the economic activity accelerated at a moderate pace in line with successful vaccination efforts and higher than expected government stimulus hit consumer wallets. Those who analyze Fed words very closely noted that in the Beige Book release this week they used the word ‘shortage’ or ‘shortages’ a record high of 37 times. The last record was in March and mentioned the term six less times than the recent release.

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