If the Fed didn't have groupthink, it wouldn't have any thought at all.
That's why I noted a comment from former Fed Chair Janet Yellen today.
She spoke with the WSJ's Nick Timiraos and inflation was a main topic. She was pointedly asked about the ongoing debate in markets, which is the fear that inflation falls to around 3% but that it proves tough to 'complete the job' and get it all the way to 2%. This is something that Powell has fretted about in the past.
Yellen said that inflation is "certainly meaningfully coming down. And I see no reason why inflation shouldn’t gradually decline to levels that are consistent with the Fed’s mandate... I personally don’t see any good reason to think that the last mile is going to be especially difficult."
Now, part of Yellen's job is to advocate for the White House and win the 2024 election, so she's paid to spin it positively but I strongly suspect that the vast majority of the FOMC will come around to her line of thinking (or is already there).
She was also asked about a wage-price spiral and/or high inflation expectations.
"That's low on my worry list," she said, adding that she does "see any evidence that inflation has become ingrained or that we have a wage price spiral"
Tomorrow, if Powell says that the last mile isn't going to be especially difficult, that will be cause for markets to celebrate, and sell the dollar.
