US Producer Price Inflation continues to highlight the “price bubble”



US Producer Price Inflation continues to highlight the “price bubble” resulting from the Covid pandemic. But note just how stable services inflation has been since 2010, and how it has now risen during this pandemic. We do not think services inflation will recede quickly.

The bottom line on inflation is that interest rates will remain deeply negative on an inflation-adjusted basis for years to come – regardless of just how much the Fed (and other central banks) are encouraged to raise administered rates in the interim.