Dr. David Krause, AIM program director said, "Despite higher gasoline prices in October (up 4.6%), the CPI was only up 0.2% because food prices were only up 0.1%. For the third consecutive month, core CPI remained flat. Year-over-year, the core inflation measure is only up 0.6 percent – the lowest reading on record."
He added, "Sarah Palin blasted the Federal Reserve's plan to buy up to $600 billion in bonds - referred to as QE2. She warned that this would unleash inflation. Palin also said that 'everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so.' Well, the year-over-year increase in food prices - which was announced today - was 1.4%. I don't see significant inflation on the horizon. And while I am not an expert on macro-economic forecasting, I think Sarah Palin and others should stick to politics and allow the Federal Reserve to do their job."
|Source: Bianco Research|
Even the 10-year TIPS breakeven inflation rate is only slightly over 2.0% suggesting that the financial markets are not concerned about inflation. To me, job creation is more of a concern presently than runaway inflation and I believe the Fed should be allowed to operate independently."