Mother of Mercy! El Gato's Take on the Fed's Economic Meow-stery!

By the Whiskers of Zeus! What Did Powell Say?

Hola mis amigos! It is I Puss in Boots reporting live from my luxurious litter box—err I mean office. Jerome Powell the esteemed Chair of the Federal Reserve has spoken! He says and I quote (after some dramatic flair of course) that interest rates are likely to be higher. Higher! Like my ego after a successful duel with a chihuahua. He mumbled something about the economy changing policies in flux and conditions having changed significantly over the past five years. Five years! Why that's practically a lifetime in cat years!

Inflation? Bah! Hairs in my Boot!

Ah inflation! The very word sends shivers down my velvety paws. Apparently there was a surge in inflation that pushed the Fed to raise interest rates. Like trying to catch the red dot they went after it with gusto. Powell claims that even with inflation expectations near 2% the era of near zero rates is gone. Kaput! Like my fur after a close encounter with a skunk. He even dared suggest that inflation could be more volatile. More volatile! As if my love life wasn't complicated enough!

Supply Shocks! Is It The Hummus?

The Fed is worried about 'supply shocks.' Honestly it sounds like something I'd blame on the dog. Apparently these shocks make it hard to balance employment and inflation. It's a difficult challenge for the economy and for central banks. Difficult? Try fitting into my boots after a hearty meal of paella! Powell even hinted at President Trump's tariffs slowing growth and boosting inflation. Tariffs! They are the things I fear the most (after the vet of course).

Looking Back... And Forward! (With Style Of Course)

The Fed is doing a five year plan to guide decisions and communicate better. Communicate better? As if! They should take lessons from yours truly. I can charm the birds from the trees with a mere glance of my emerald eyes. They're reviewing how they communicate their expectations and adjust their past reviews. Remember the 'flexible average inflation target'? A dead issue they say! As dead as a mouse in my clutches. The current review will consider 'shortfalls' in inflation and employment goals. Such seriousness! It makes me want to take a nap.

Transitory? My Left Whisker!

Ah the word 'transitory'! They initially dismissed the inflation surge as such blaming it on the pandemic. But several Fed officials now admit that their 2020 framework didn't factor into their decision to keep rates near zero. Zero! The same number of regrets I have about eating that entire plate of churros. They're reconsidering the language around 'shortfalls' and average inflation targeting. Honestly it's all just a bunch of fancy words for 'we messed up!' But as I always say 'Life is a tapestry Dulcinea. Woven with mistakes!'

Communication Breakdown? More Like Communication Paw sibilities!

Powell says communication needs improvement. Improvement! They should hire me! I could explain the economy in sonnets sing its praises or even dance a little flamenco to make it all understandable. The Fed wants to convey the uncertainty surrounding the economy and outlook. Uncertainty? That's my middle name! Powell didn't give a specific date for the review's completion just 'coming months.' Well I for one will be watching... with my claws sharpened and my rapier at the ready!