Speaker Profile: Beaulieu, ITR on “The Inflation Boogie Man”

Popular economist Alan Beaulieu, president of ITR Economics, will again be a keynote presenter during the 2021 SMU Steel Summit Conference Aug. 23-25 in Atlanta, providing insight on the economy’s recovery from the pandemic and the outlook for 2022 and beyond. Below from a recent blog, ITR Economics puts the current inflation fears into perspective.

As ITR Economics reported in a recent blog, there is quite a bit of discussion regarding the threat of inflation and its attendant impact on interest rates. The CPI Less Food and Energy (so-called Core Inflation) is a close proxy for the inflation gauge the Fed uses. You can see that the Core Inflation rate rose to 3.0% in April. A 3.0% rate is noteworthy, but it is not cause for alarm if you are concerned about the Fed deciding it is time to move interest rates higher in order to curtail any imbedded inflationary pressures. They have indicated that they will tolerate a higher rate of inflation going forward for as long as a couple of years in order to balance out the periods when the Core Inflation rate was running below 2.0%. Bottom line: even with energy up 25.1% in April from one year ago, the Fed is not expecting the increased inflation rate to endure long enough to force their hand and push interest rates upward.