The Fed is missing its mandate
US inflation rose at just a 1.0% pace in Q1, according to the updated GDP report. That's significantly slower than 1.3% reported in the advance report.
Fed officials maintain that soft inflation is 'transitory' and will soon accelerate back to target. The problem is that they don't have much credibility on that front. They have missed their 2% target for 10 years running.
The theory will be put to the test -- in part -- on Friday with the release of the April PCE report. The consensus is for headline and core inflation to rise 1.6% y/y but the market will be leaning lower after GDP.
