Fed’s open market committee will meet this week. No change in the policy rate is anticipated. Chairman Powell will push back against the market’s expectation of sooner-rather-than-later rate cuts. The reason being that the economy is much stronger than generally believed, thanks to the surge in productivity. The later has probably risen at another extraordinary annual pace in Q4/2023. My quest is 3.0%. It further explains why inflation has fallen so quickly. Indeed, the tide of inflation has clearly turned for the better. The TrueInflation Index is now up only 1.8% from last year.
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By Hubert Marleau