CNBC: The Fed’s favorite inflation indicator increased 0.2% in July, as expected

The Fed’s favorite inflation indicator increased 0.2% in July, as expected  

https://www.cnbc.com/2024/08/30/pce-inflation-july-2024.html

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Difference between the inflation rate and growth of wages in the United States from April 2020 to April 2024  

https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/

United States Wages and Salaries Growth  

https://tradingeconomics.com/united-states/wage-growth

CNBC: US wholesale prices jump 0.6% in Oct, the most in 6 years

US wholesale prices jump 0.6% in Oct, the most in 6 years https://www.cnbc.com/2018/11/09/us-ppi-oct-2018.html

Bloomberg: It’s Alive! Or Is It? Economists Spar on Inflation Frankenstein

It’s Alive! Or Is It? Economists Spar on Inflation Frankenstein https://www.bloomberg.com/news/articles/2018-02-08/it-s-alive-or-is-it-economists-spar-on-inflation-frankenstein

Bloomberg: Fed to Pack Up Crisis Tool, Debate Next Hike: Decision-Day Guide

https://www.bloomberg.com/news/articles/2017-09-20/fed-to-pack-up-crisis-tool-debate-next-hike-decision-day-guide

CNN: What a Fed rate hike means for you

http://money.cnn.com/2017/03/14/news/economy/fed-rate-hike-interest-savings-mortgage-march/

Fed to delay hiking rates

http://video.cnbc.com/gallery/?video=3000364767

Interest rate and stock market

http://www.marketwatch.com/story/heres-what-stocks-do-in-the-months-just-before-a-rate-hike-2015-03-06

Federal reserve ends Quantitative Easing

http://www.cnbc.com/id/102132961

Fed completes the taper

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The Federal Reserve ended its historic easing program Wednesday, ceasing the final $15 billion of monthly bond purchases it had made in an effort to keep the economic recovery going, in a statement that kindled market talk about a more hawkish central bank.

Though it ended the program, the Federal Open Market Committee kept the "considerable period of time" language that investors had considered crucial in the central bank's map for when it would raise interest rates. The "considerable" time refers to when the Fed will begin raising rates after the end of the monthly bond buying.

To that end, it said it would keep its short-term target funds rate anchored near zero until it sees more improvement from the economy.

But it also noted significant economic gains, expressed some doubt that low inflation would continue and struck a tone that some anticipated as a tip toward those on the committee who advocated the Fed start to consider tightening policy.

After some meandering stocks ultimately sold off after the statement. Interest rates moved higher as did the U.S. dollar.

"The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the statement said, in language that closely reflected pronouncements at previous meetings.

Other parts of the statement were new, though, and generated more talk than usual about when the Fed might change policy course.

Read MoreWhy the market is losing its faith in the Fed

"While the Fed did maintain its promise to keep rates low for a considerable time after this meeting, the rest of the statement sounds positive about the economy and thus reads more hawkishly from a market perspective," Dan Greenhaus, chief strategist at BTIG, said in a note. "While we're a bit surprised the Fed chose to move in a hawkish direction without an accompanying press conference, the fact remains that the U.S. economic expansion is continuing, the labor market is improving and general conditions are better today than they were say one year ago. If that's the case, then why shouldn't the Fed speak more optimistically?

"The Federal Reserve has done a fantastic job of communicating what their plan is," Michael Arone, chief investment strategist for State Street Global Advisors, said in a phone interview. "They are on track to begin policy normalization in the middle of next year, which is what they've talked about. They remain steadfast that they're going to rely on data to do that."

Read MoreHere's what changed in the latest Fed statement

One area that drew some interest and departed from recent Fed statements was a somewhat more hawkish tone on inflation, which has been held in check by lower energy prices.

"Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year," the statement said.

The FOMC also said there has been "substantial improvement" in the jobs outlook and "underlying strength in the broader economy," which helped provide the impetus to "conclude its asset purchase program this month." The quantitative easing program had swelled the Fed's balance sheet past the $4.5 trillion mark in what the market colloquially calls "money printing."

The statement was approved with only one dissent, from Minneapolis'Narayana Kocherlakota, who advocated keeping QE in place until inflation breached 2 percent.

Andrew Harrer | Bloomberg | Getty Images

A U.S. flag flies on top of the Marriner S. Eccles Federal Reserve building in Washington, D.C.

In recent months the Fed has equivocated as to what it would take to raise rates. Initially, the FOMC had set 6.5 percent unemployment and 2.5 percent inflation as benchmarks.

But unemployment has slid to 5.9 percent, while inflation, as reflected through the Fed's favorite measure, remains well below 2 percent.

In response, Fed officials have said the decision on rates would be "data dependent," though they haven't been specific about which data and what levels would generate a change in policy.

Read MoreQE3 ends: The best of Finance Twitter

"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run," the FOMC said in language that, again, mirrored past statements.

When instituting what has become known as QE3, the Fed also said it was an "open-ended" program, meaning that unlike its two predecessors there was no calendar date provided for when it would end.

There was no mention in the statement about what it would take to restart the asset purchase program, but the possibility is likely to stay near in investors' minds.

"Let's say it was suspended rather than ended," Michael Boockvar, chief market analyst at The Lindsey Group, said in a note.

Feds policy

http://www.cnbc.com/id/102050278

Producer price index for May 2013

http://mam.econoday.com/byshoweventfull.asp?fid=456115&cust=mam&year=2013&lid=0

Producer Price Index

Released On 4/12/2013 8:30:00 AM For Mar, 2013 Prior Consensus Consensus Range Actual PPI - M/M change 0.7 % -0.2 % -0.7 % to 0.5 % -0.6 % PPI -Yr/Yr change 1.8 % 1.1 % PPI less food & energy - M/M change 0.2 % 0.2 % -0.1 % to 0.2 % 0.2 % PPI less food & energy - Yr/Yr change 1.7 % 1.7 %

Highlights The headline number was much weaker than expected but it was almost all related to a fall in gasoline prices. The March producer price index fell back 0.6 percent after a strong 0.7 percent boost in February. Market expectations were for a 0.2 percent decline. The core rate, which excludes both food and energy, increased 0.2 percent after rising 0.2 percent in February. Analysts expected a 0.2 percent increase. Food prices rebounded 0.8 percent after falling 0.5 in February. Energy costs in March dropped 3.4 percent, following a 3.0 percent boost the month before. Gasoline fell 6.8 percent after spiking 7.2 percent in February. Within the core, almost one-quarter of the March advance can be traced to prices for civilian aircraft, which rose 0.7 percent. Also, pharmaceuticals increased 0.4 percent. Key players in the core, passenger car prices gained 0.2 percent while light trucks were flat. For the overall PPI, the year-ago rate eased to 1.1 percent from 1.8 percent February (seasonally adjusted). The core rate held steady at 1.7 percent. On a not seasonally adjusted basis for February, the year-ago headline PPI was up 1.1 percent, while the core was up 1.7 percent.

Market Consensus before announcement The producer price index in February producer price index increased a strong 0.7 percent, following a rebound of 0.2 percent in January. The boost was largely energy related. The core rate, which excludes both food and energy, rose 0.2 percent-matching the prior month's pace. Food prices declined 0.5 percent after jumping 0.7 percent in January. Energy costs in February accelerated to a 3.0 percent boost, following a 0.4 percent decline the prior month. Gasoline spiked 7.2 percent, following a monthly decrease of 2.1 percent in January. Within the core, about 20 percent of the February increase was traced to prices for pharmaceutical preparations, which moved up 0.2 percent. Passenger car prices gained 0.3 percent while light trucks rose 0.1 percent.

Definition The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measure the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. The headline PPI (for finished goods) is a measure of the average price level for a fixed basket of capital and consumer goods for prices received by producers.  Why Investors Care

It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the PPI are mainly volatile because of sharp fluctuations in food and energy prices. The core PPI eliminates the sharper fluctuations. Data Source: Haver Analytics

Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core PPI does not fluctuate as much as the total PPI. Data Source: Haver Analytics