This is a stagflation fear we‚Äôre seeing:
The central bank can‚Äôt be ‚Äúcomplacent about inflation,‚ÄĚ Janet Yellen, President of the Fed Bank of San Francisco, said in a speech yesterday. Recent measures of consumers‚Äô outlook for prices ‚Äúhighlight the risk that our attempts to deal with problems in the real economy could lead to higher inflation expectations and an erosion of our credibility,‚ÄĚ she said.
Yellen also said she anticipates inflation will slow as the labor market weakens and ‚Äúcommodity prices level off,‚ÄĚ echoing comments by other policy makers.
Investors project the Fed will keep the benchmark interest rate unchanged at its next meeting on June 25. That would be the first pause since the central bank started cutting rates in September.