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US: The Nominal Anchor Still Holds
From macroeconomicpolicynexus.substack.com
The U.S. economy has now experienced inflation above 2 percent for five consecutive years. The latest reading, the March headline PCE inflation, came in hot at 3.5 percent, raising concerns that inflation may no longer be well anchored. Some observers argue this uptick is temporary, reflecting one-off factors such as the Middle East conflict and tariffs. Others, however, see deeper forces at work: a gradual unmooring of inflation expectations, persistent fiscal pressures with deficits near 6 percent of GDP, and perhaps even a Federal Reserve that has been too slow to tighten policy. So which is it? The textbook ... (full story)