Mission Accomplished? Nope. The Fed Is Losing Its War On Inflation

Since late 2022, the Wall Street crowd and financial analysts have been predicting the “pivot” away from interest rate hikes to interest rate cuts by the Fed. Guess what? They’ve been wrong the entire time and they’re wrong again now.

The Fed began raising rates in March 2022. They started when the target rate was 0.0% and increased that rate to 5.5% by July 2023. They have stood pat since then but have not cut rates.

Wall Street said in late 2022 that the Fed would pivot to rate cuts in early 2023. Then it was mid-2023. Then it was late-2023. Then it was June 2024.

They have been wrong the entire time and will be wrong again in June; the Fed will not cut rates then either.

The pivot forecasts have gone by the names “Goldilocks” and “soft landing.” That’s not analysis, it’s just a false narrative and a kind of marketing gimmick to get you to buy stocks.

Inflation did peak in June 2022 at 9.1%. It did drop quickly to 3.0% in June 2023. So far, so good.

The Fed declared “Mission Accomplished” and stopped raising rates in July 2023. But as was the case in the War in Iraq in 2003, the declaration of Mission Accomplished was both premature and flat out wrong.

Inflation started going up again. It hit 3.7% in September 2023, and was 3.4% in December. Inflation was still 3.2% in February 2024 and the latest reading for March 2024 was 3.5%, the highest since September 2023. The fact that inflation is now stuck and is higher today that it was nine months ago is detailed in this article.

Unfortunately, the situation is unlikely to improve in the coming months. A near 30% spike in oil prices in the past few months is still working its way through the economy and will keep a floor under inflation for the near future.

The Fed (and Wall Street) should have learned a lesson from the military in Iraq. When you declare Mission Accomplished, make sure the war is actually over.

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