CNBC – February 14, 2018: The highlights are: The Consumer Price Index, which is used as a key indicator of inflation trends, jumped 0.5 percent in January, way above market expectations, which is of concern. And the markets reacted sharply from the news and with stocks sliding and government bond yields rising, are not good signs. The Fed is watching this inflation trend closely and the news from the report could add fuel to interest rate hikes.
Federal Reserve policymakers have a goal of 2 percent inflation, which is a sign they say indicates that the economy is strong, but not moving too quickly. “The worry of the markets is not that inflation is becoming a big problem, … it is that the Fed is now forced to play catch up at the same time they are shrinking their balance sheet,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.