WSJ's Timiraos says Federal Reserve officials uneasy that inflation could re accelerate

A weekend piece in the Wall Street Journal (gated) from Fed insider Nick Timiraos.

Stubbornly high inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term is finally easing as supply chain disruptions fade and interest rates at 15-year highs put the brakes on demand. Now, Federal Reserve Federal Reserve The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the Read this Term officials have voiced unease that prices could reaccelerate because labor markets are so tight.

At issue is what’s the right way to forecast inflation: a bottoms-up analysis of recent readings on prices and wages that puts more weight on pandemic-driven idiosyncrasies—or a traditional top-down analysis of how far the economy is operating above or below its normal capacity.

Some inside the Fed, including its influential staff, put more weight on the latter, which would argue for tighter policy for longer. Others prefer the former, which could argue for a milder approach.

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The Federal Open Market Committee (FOMC) meet this week, statement is due Wednesday February 1 at 2pm US ET (1900 GMT) with Powell's presser following a half hour, later.

• the market is pricing in a 97% chance of 25 bps and only the slightest tail risk of 50 bps

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Some background to this.

• Back in June 2022 Timiraos dropped the bombshell during the Federal Reserve blackout period:
  
  WSJ Fedwatcher Nick Timiraos is just out with a new report previewing the FOMC.
  
  "A string of troubling inflation reports in recent days is likely to lead Federal Reserve officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week," he writes.
  
  The report is speculation but it taps into the old-style Fed leaks.

Timiraos was spot-on.

Timiraos has thus been crowned the new Hilsenrath (you may remember his role during the Bernanke Fed as a provider of Fed-insider info).

Timiraos on every line ....