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Bond Market Sees Danger of Inflation Falling Below Fed’s Target
Two years into the Federal Reserve’s battle against inflation, bond investors are seeing a new risk: Consumer prices are cooling too much. A day ahead of the August inflation report, one gauge of expectations of consumer price index increases is showing that prices are in danger of falling below the Fed’s target. The central bank has long argued that persistently low inflation is as detrimental to the economy as elevated prices because it would force policymakers to keep borrowing costs too low for too long, reducing the Fed’s ability to fight off economic downturns. “Market participants are sensing that the ... (full story)