Stalled Inflation Means Idle Printing Presses At The Fed

If like our merry band of money printers at the Fed you don’t think food and energy are necessities, and therefore can be omitted from the inflation index, today’s PCE deflator report should give cause for pause. The reading on the Fed’s favorite sawed-off inflation ruler (PCE deflator less food and energy) was up +2.8% on a Y/Y basis, and, more importantly, provided confirmation that the Fed’s so-called battle against inflation has stalled out.

In fact, the February 2025 reading was the same as last April, but also was far above the 1.8% per annum average that prevailed between the Fed’s adoption of its sacred 2.00% inflation target in January 2012 and the pandemic era lockdowns and spending and money printing sprees after February 2020 that sent inflation soaring toward 40-year highs.