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How the Fed Could Be Wrong on Inflation

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Policymakers at the U.S. Federal Reserve are in danger of failing to see the real path of inflation rates and stoking market volatility in the process, according to new research by multinational investment firm Pimco.

According a company blogpost, the central bank hasn’t fully understood the real reasons behind a recent collapse on the breakeven inflation rate — an important metric used to gauge longer-term trends in consumer price growth. This breakeven rate is the difference between the yield on a fixed-rate bond and an inflation-linked bond such as a Treasury inflation-protected security (TIPS).

CNBC

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.
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