CPI Moves Higher, Stubbornly Above Fed's Target Rate!

CPI as reported for December is up, but not by amounts that set off alarm bells! December CPI was up .3%, and annual CPI was up 4.1%, the highest in 17 years. Of course, we all know that CPI is grossly underestimated, and that the Fed ignores total inflation, ignoring food and fuel costs. The real inflation rate is closer to 7-8%.

Paul Volcker has also criticized the current Fed leadership today. Where is the man, Volcker, when we need him? The Volcker Fed was far more effective, and didn't pander to Wall Street.

This CPI report will probably encourage continued Fed easing of interest rates. This alone will probably cause commodities prices to rebound higher, since continued devaluation of the US Dollar is a natural consequence.

In the minutes following the CPI data release, gold and oil prices are moving higher, and the US Dollar is moving lower. Surprised?