Inflation Rising Is Awkward For Powell, Nightmare For Harris

So, if we’re bumping along at 4% core with a recession coming, it suggests that underlying inflation could be 7-plus percent.

That would make it very dumb for Powell to have just cut rates by a jumbo half-point, with more cuts on deck.

It’s just another month in the Federal Reserve clown car.

To be fair, Powell did admit last year they have no idea what they’re doing. He phrased it as the Fed navigating by star on a cloudy night. As in navigating by stars you can’t see.

Which is not navigating; it’s pretending to navigate.

To be fair, pretending pretty much sums up the Federal Reserve–or central banks in general, really: They pretend to manage the economy, but really all they do is print as much money as possible–which causes inflation, then recessions–and then try to balance the two to keep headlines manageable.

A little pain here (inflation); a little pain there (recession)–with the people not realizing the Fed’s causing both.

So, what’s next?

If prices are rising, the Fed’s room for errors just got a lot tighter. Markets can see this, with the odds of another mega-cut dropping to zero for the Fed’s next meeting and mortgage rates rising again since higher interest rates mean expensive mortgages.

This means we could be stuck with 7% mortgages and a frozen housing market well into next year.