Speaking from Jackson Hole, Fed Chairman Powell said, “Inflation is too high,” adding that they are prepared to raise interest rates further. The inflation rate in June/July has been around 3%.
The Feds effort to dampen inflation is working as the latest data shows a continued shrinkage of money supply. The conundrum is that nominal GDP is up 6.3% from a year ago so somehow, the broader economy is growing despite less money circulating.
A side effect of all that additional money supply was a rise in stock prices. Excess money tends to end up with consumer spending or investing. However, the money supply is shrinking so this trend may reverse for a time unless we see good financials from companies this fall.
Edi Alvarez, CFP®
BS, BEd, MS