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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).

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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