Is Fed Signaling Encouraging Some Inflation?Fed holds interest rates steady but signals that there will be two more 25 bp hikes. Don't the signals themselves create some inflationary?
There was once a segment of the population back in the 1970's that said "buy today because it will only cost more to buy tomorrow." That isn't that much different from todays' mind set to "borrow today because it will only cost more to borrow tomorrow."
Signals encourage front running. Borrowing and inflation in this case.
Since consumer spending represents approximately 70% of the economy, maybe it would be better for the Fed to revert back to its old format of not sending signals on the direction of interest rates.
If consumers didn't think that it would cost more to borrow tomorrow, it wouldn't encourage them to rush out and buy something today. Hence less inflation.