Producer Prices SCREAM Inflation, 4.2% YoY (Highest Since 2011) After Powell Tells Congress That Inflation Risk Is Low

In March, Fed Chair Powell told Congress that inflation risk remains low.

The Bureau of Labor Statistics this morning reported that US Producer Price Index Final Demand year-over-year rose a whopping 4.2%, the highest rate since 2011.

Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e. prices received by domestic producers for their outputs either on the domestic or foreign market).

Even without food, energy and trade, Final Demand Prices rose 3.1% year-over-year.

Of course there is going to be inflation with Biden’s multi-trillion spending spree and The Fed’s prodigious money printing.

Now, defenders of The Fed flag will say that 4.2 is still low. But with Biden and Congress going wild with spending, its only just begun.

Equity managers need to thank Powell and Yellen (Powellen??)

Taylor Rule (Rudebusch) Calls For Fed Funds Target Rate Of 2.66% (Fed Rate Is Currently At 0.25%)

Amazingly, The Federal Reserve keeps stoking the asset bubble with near zero interest rates. Despite the fact that the Taylor Rule (Rudebusch specification) is calling for a Fed Funds target rate of 2.66%.

Uber-dove Charles Evans, President of the Chicago Federal Reserve, is calling for more gas on the asset bubble fire with a TR estimate of -1.13 for the Fed Funds Target Rate.

I call this The Fed Fire.