ST inflation is a word that has been uttered a
little bit more um recently than um in the recent
past. Let's put it that way. But it's
there, there's no stench of stagflation right now.
It's just a little bit of whip in the air
. Now, the question really is since we don't
have a stagflation right now, um What should the
fed be doing now potentially to help the economy and
the inflation profile? Well, if you take a
look at some of the um underlying components of inflation
, the thing that's really driving the inflation up,
they're not interest rate sensitive. So an example I
like to use is car insurance. Car insurance is
something you have to buy. It's, it's the
law to buy it. And that is one of
the things that have been going up really high.
Well, that's not necessarily dependent and you're not gonna
borrow money to buy car insurance. So you're gonna
have to buy it anyway, that's going up if
the fed keeps rates longer to potentially bring inflation down
. Well, that's not gonna come down, is
it because it's not rate dependent? So that's an
example, right? So what I think the fed
should be doing is starting to normalize interest rates sooner
rather than later to help some of the areas where
that have been hit pretty hard by these rate increases
, namely housing and therefore rent prices going up if
housing activity resumes uh toward normalization. I do think
that rent prices, that that inflation on the rent
side uh may start to come down uh because of
the housing activity. So actually, ironically, lowering
rates can actually help with the inflationary uh scenario.