The Fed's worst nightmare could be around the corner
The Federal Reserve faces pressure to cut interest rates from investors and President Donald Trump. But the recent, albeit brief, spike in oil prices following an attack on oil fields in Saudi Arabia earlier this month raises a problem with that rate-cutting strategy: Inflation.
The threat of stagflation — a toxic combination of a slowing economy combined with rising prices — could make Fed chair Jerome Powell's job much more difficult. Central bankers will need to pay even more attention to economic data points before making any further moves to cut rates.
"The Fed is like a base runner stuck between first and second base on a fly ball," said Matt Forester, chief investment officer of BNY Mellon's Lockwood Advisors. "It will need to be even more data dependent and reactionary. Higher oil prices would be a shock that is stagflationary."
Forrester noted that higher oil prices are "unwelcome news," because of concerns about the weakening economies of China and Europe.
https://www.msn.com/en-us/money/markets/the-feds-worst-nightmare-could-be-around-the-corner/ar-AAI3E3u?li=BBnbfcN
Hmm, the last time we had stagflation was under Nixon who by the way was the last president before Trump who tried to pressure The Fed.
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Prices are up, wages are flat for millions of Americans.
