Wells Fargo Senior Economist Sarah House on CPI Release

The transcript discusses the persistent inflation pressures and the Federal Reserve's hawkish stance to control it. It highlights the challenges in reducing core PCE inflation to 4% by year-end, with factors like base effects and demand for services playing a role. The discussion also covers the impact of the pandemic, the Ukraine war, and fiscal policies on inflation. The Fed's monetary policy, including potential interest rate hikes, is examined as a tool to manage inflation without triggering a recession. The role of the neutral rate and labor market dynamics in shaping economic outcomes is also explored.

What is one of the main reasons the Federal Reserve is under pressure to maintain a hawkish path?

• The rapid decrease in inflation rates

• The entrenched nature of price pressures

• The decline in consumer demand

• The stability of the housing market

According to the transcript, what are the two leading causes of inflation mentioned by President Biden?

• Supply chain disruptions and fiscal stimulus

• Rising housing costs and the pandemic

• Mr. Putin's war and the pandemic

• The pandemic and fiscal stimulus

What is the primary focus of the policy response to inflation, as discussed in the transcript?

• Increasing fiscal spending

• Enhancing international trade

• Implementing monetary policy measures

• Reducing government debt

What is the potential consequence of slowing the economy to control inflation?

• A rise in employment rates

• The risk of entering a recession

• A decrease in interest rates

• Increased consumer spending

What is the 'neutral rate' of interest according to the Federal Reserve?

• A variable rate based on inflation

• A fixed rate of 5%

• A rate determined by the stock market

• A range between 2% and 3%

How does the labor market contribute to inflation, as discussed in the transcript?

• By decreasing service demand

• By stabilizing housing prices

• By increasing labor costs

• By reducing consumer spending

What is a key difference between current inflation dynamics and those of the 1970s?

• More significant fiscal stimulus in the 1970s

• Lower participation among prime age workers now

• Higher rates of unionization today

• Greater reliance on imported goods today