US Bond Market Week in Review: The Fed Has to Rethink Their 2% Inflation Target

       For what seems like forever, the Fed has been saying they are using a 2% inflation target.  Given this expansion’s weak growth, this seems to be a fair and appropriate number.  But intuition can be deceiving.  The San Francisco Federal Reserve has issued several reports showing the natural rate of interest to be right around 0% — which tells us the natural rate of inflation is probably below 2%.  Despite an unemployment rate below 5%, wage growth is also weak.  While this means the Phillips curve is at best very flat, it also means inflation expectations on the pa

Source: XE news feed
US Bond Market Week in Review: The Fed Has to Rethink Their 2% Inflation Target