Underlying inflation pressures remain a shadow for the Fed – RBC Capital Markets’ Frances Donald

Underlying inflation pressures remain a shadow for the Fed – RBC Capital Markets’ Frances Donald | Seeking Alpha

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While June's flat core CPI reading offers temporary relief, underlying inflation pressures remain a significant concern, said Frances Donald, chief economist at RBC Capital Markets.

In a Bloomberg podcast interview, Donald emphasized that the headline decline is almost entirely driven by

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Quick Insights

How sustainable is the recent decline in U.S. headline inflation?

The recent headline inflation decline is mainly due to falling energy prices and may not be sustainable as underlying core inflation pressures persist.

What risks does persistent core inflation present for the Federal Reserve's policy stance?

Persistent core inflation, driven by demand-side factors, means the Fed must stay vigilant and is likely to keep policy on hold rather than respond to short-term headline figures.

How are rising consumer prices affecting American household resilience?

Consumers have faced about a 30% price rise in five years, savings are depleted, and they may not be able to withstand another price shock despite temporary CPI relief.

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