Minutes released Wednesday from the last Federal Reserve meeting showed that policymakers expect inflation to “move up to the… 2 percent objective over the medium term as economic growth remained above trend and the labor market stayed strong.”
Markets have once again interpreted this as a sign that a sudden increase in inflation could be around the corner. U.S. sovereign yields hit session highs on the minutes, with the 10-year Treasury yield seeing a return to its recent four-year highs.
But Lacalle warned Thursday that “disinflationary pressures (which are a short-term slowdown in prices) are much stronger trends than those small commodity driven inflationary pressures that we have seen in the short term.”
Headline inflation in the U.S. hit 2.1 percent in January, above expectations suggesting a 1.9 percent increase. Lacalle told CNBC that such a headline figure was mostly due to higher energy and food price increases.
“No consumer ever has benefitted from rising food and gas or power prices. And, again, it shows a worrying fixation of economists with higher inflation at any cost, even if it is negative for consumers,” he said in a note.
