The Fed failed to hike interest rates in March despite the “data” hitting levels at which the Fed said it would hike. Indeed, the Fed even lowered its expected number of rate hikes for this year from four to two!

This confirms for us that the Fed does indeed want inflation.

In the last few weeks, several Fed officials, most notably Fed Vice-Chair Stanley Fischer stated not only that inflation was appearing in the US but that this is something the Fed “would like to happen.”

In separate prepared remarks in Washington, neither Fed Vice Chairman Stanley Fischer nor Gov. Lael Brainard made direct reference to next week’s meeting of the Federal Open Market Committee. But Brainard argued for patience in rate increases amid possible risks that inflation and U.S. economic activity will fall.

“Tighter financial conditions and softer inflation expectations may pose risks to the downside for inflation and domestic activity. From a risk management perspective, this argues for patience as the outlook becomes clearer,” Brainard said.

Source: CNBC

AND…

Inflation is showing signs it could accelerate in the United States, a top Federal Reserve policymaker said in comments that back the view that the central bank will hike interest rates again this year.

“We may well at present be seeing the first stirrings of an increase in the inflation rate,” Fed Vice Chairman Stanley Fischer said on Monday in prepared remarks, adding that faster inflation was “something that we would like to happen.”

Source: Reuters

 With that in mind, take note that the Fed is finally achieving this, with US Core inflation well above the Fed desired rate of 2%:

united-states-core-inflation-rate

Moreover, “sticky inflation” (considered by some to be the purest “official” measure of inflation) has hit 3%.

 stick CPI

And finally, the Cleveland Fed’s Median CPI is growing at an annualized rate of 2.8%.

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.8% annualized rate) in February…

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers fell 0.2% (-2.0% annualized rate) in February. The CPI less food and energy rose 0.3% (3.4% annualized rate) on a seasonally adjusted basis.

Over the last 12 months, the median CPI rose 2.4%, the trimmed-mean CPI rose 2.0%, the CPI rose 1.0%, and the CPI less food and energy rose 2.3%.

Source: Cleveland Fed

Put simply, the inflation genie is out of the bottle. Core inflation is already moving higher at a time when prices of most basic goods are at 19-year lows. Any move higher in Oil and other commodities will only PUSH core inflation higher.

The Fed is cornered. Inflation is back. And Gold and Gold-related investments will be exploding higher in the coming weeks.

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Chief Market Strategist

Phoenix Capital Research

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Graham Summers

Chief Market Strategist

Phoenix Capital Research