pressure is rising on Federal Reserve distance The biggest rise in consumer prices In more than 30 years, three market analysts said Wednesday.
The Labor Department’s Consumer Price Index rose 6.2% year-over-year in October, the largest increase since December 1990. The annual core inflation rate rose at the fastest pace since August 1991.
Market analysts largely noted the hotter-than-expected numbers, saying the Fed may have to take action if the data continues to prove inflation.
Here’s what three of them told CNBC:
Jeremy SiegelD., a professor of finance at the University of Pennsylvania’s Wharton School, called the CPI report “disturbing”:
“Listen, stocks love inflation until the Fed gets serious about it and isn’t serious about it. We’ll see. They’ll get another inflation report in December or November before their December 15th meeting. If that’s anywhere like today, I think the pressure on [Fed Chairman Jerome] Powell would be phenomenal to come down much stronger than he has been so far.”
Chief Equity Analyst at Cerity Partners and CNBC contributor Jim Lebenthal sees stocks holding their rally until early next year:
“I think the Fed has to be serious, but what does that mean? The thing you have to look for is when do they raise rates? And we are months away from that, maybe at least two quarters, and the date says after the Fed starts raising rates.” Interest rates, you usually get a couple of years of recovery after that. So I’m really not worried in general. This horse to the finish line. The finish line until the end of this year, but I think when you get to late January you will find Some volatility like it did in early 2018 after a great 2017 because what happened? When did it go up 25% like this year in Standard & Poor’s 500No one wants to sell and anyone who has been bearish in the portfolio management space has to chase this rally. That will push us into January, but then you can look for me to start making money in late January. Did you hear here first?”
Barry Knapp, managing partner of Ironside Macroeconomics, warned of a potential “credibility crisis” for the Federal Reserve:
“I think the Fed is headed for a bit of a meltdown here somehow in early 2022. Either they’re going to practice what I call affirmative action, which is this idea, well, they set their buying cuts for the first couple of months, but then they said we are open to increasing or decreasing these. Chances are they won’t do anything. If they don’t do anything, if they don’t speed it up given what is likely to talk with the data, which has continued to strengthen on the activity side and on the inflation side, then you’re going to have a serious credibility crisis And what it looks like is a big drop in the dollar, a bigger move in inflation breakevens that have already reached all-time highs and are just a general crisis of Fed confidence.”