Posted inAT+

Nothing transitory about this inflation

“A number of participants” at the April meeting of the US Federal Open Market Committee “suggested that if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” according to meeting minutes released May 19.

That means the Fed hasn’t agreed to talk about the inflation problem, but it might agree to talk about it in the future, which isn’t the same as doing something about it. But the threat of such a discussion was enough on Wednesday to push up the yields on inflation-indexed Treasury notes and sink the stock market.

The latest reading from the Manheim used vehicles index, the industry-standard monitor of wholesale used car prices, shows that prices continued to head straight up during May. Used vehicle prices are up more than 50% year to date (that’s a compounded rate of about 200% a year), compared with a paltry 20% rise in the Consumer Price Index for used vehicles.