Will Rising Inflation Force Fed's Hand

July, 2021

Inflation Jumps to Highest Level in 13 years; How Will Fed Respond?

Key Takeaways:

  • Headline inflation increased to 5.4% in June, the highest level since the summer of 2008.

  • Reopening of service sectors such as air travel, hotels, recreation and entertainment contributed to the rise.

 
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  • Labor shortages are putting upward pressure on wages, particularly in the restaurant and hospitality industries.

  • Increased demand along with supply-chain bottlenecks and higher shipping costs are impacting goods prices, including construction materials.

  • Many of the inflation drivers are likely to be transitory, keeping Fed stance largely accommodative.

 
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