Janet Yellen Is In Total Denial
Let's all be sure we take note of these words, we'll be able to use them against her later (and not all that much later, either) when Janet is proven horribly, horribly wrong.
WSJ's Real Time Economics:
The Federal Reserve is unlikely to have to raise interest rates soon because the surge in global commodity prices should have a temporary impact on U.S. inflation, a key Fed official said Monday.
However, Fed Vice Chairman Janet Yellen said in prepared remarks that the U.S. central bank will keep a close eye on inflation developments to avoid the mistakes of the 1970s, when high oil prices led to sharp increases in consumer prices.
The sharp rise in prices for oil, grains and other commodities appear “unlikely to have persistent effects on consumer inflation or to derail the economic recovery and hence do not, in my view, warrant any substantial shift in the stance of monetary policy,” Yellen said.
Or, from her speech directly:
Increases in energy and food prices are, without doubt, creating significant hardships for many people, both here in the United States and abroad. However, the implications of these increases for how the Federal Reserve should respond in terms of monetary policy must be considered very carefully. In my remarks today, I will make the case that recent developments in commodity prices can be explained largely by rising global demand and disruptions to global supply rather than by Federal Reserve policy. Moreover, empirical analysis suggests that these developments, at least thus far, are unlikely to have persistent effects on consumer inflation or to derail the recovery. Critically, so long as longer-run inflation expectations remain stable, the increases seen thus far in commodity prices and headline consumer inflation are not likely, in my view, to become embedded in the wage and price setting process and therefore are not likely to warrant any substantial shift in the stance of monetary policy. An accommodative monetary policy continues to be appropriate because unemployment remains elevated, and, even now, measures of underlying inflation are somewhat below the levels that FOMC participants judge to be consistent, over the longer run, with our statutory mandate to promote maximum employment and price stability.
So should we just go ahead and ignore the fact that the Fed has failed miserably in both mandates? Prices are up, employment is still dismal and thus far I have yet to see any signs of the Fed being able to control either.
They're doing a great job screwing both, however, from what I can see.
Then again, what do I know? I'm but a humble observer who is really irritated by having to sink $50 into my Mazda to fill her up.