(lack of) Inflation On Our Minds … How Fed Reads GDP -WSJ

INFLATION ON THE BRAIN and trying to come up with better excuses for the current bond market response to the more obvious – Greece and Month End – excuses which are most commonly being tossed at us. Yes there IS gonna be an EU meeting this weekend – FinMin to hold news conf AFTERwards. 14:00 GMT Sunday. Be there or be square. IN THE MEANTIME … How about the ‘good’ economic numbers of the morning – namely GDP. Just noticed this one from the WSJ and thought we’d offer it up as it’s as good a READ as anything from The Street:

How the Fed Will Read Latest GDP Numbers By Jon Hilsenrath

Full story just below BUT again, being rate guys, here’s what matters to US:

However, the core price index, which strips out volatile food and energy prices, was up 1.4% in the first quarter from a year ago, at the lower edge of the Fed’s forecast. And an alternative measure of core prices, the market-based PCE which excludes things like checking services for which there is no price to be measured, was up 1.2%. That’s below the Fed’s forecast. Moreover, price momentum still seems to be on the downside, not the upside. Core consumer prices rose at a 0.6% annual rate in the first quarter. (In other words, if the first quarter is repeated over and over again for the rest of the year, prices will barely rise.) Core prices in the market-based index were up 0.3% at an annual rate in the first quarter.

Bottom line: Not much here to shift the Fed’s view on growth, but the slowdown in core inflation is something that is being watched very closely.

Here’s the PDF (via Scribd) for your dining and dancing pleasure:

Fed on GDP and NO Infl 043010

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