Friday, April 28, 2006
William Polley thinks the inflation data in the report means the Fed will slow down the pace of Fed funds rate increases. I'm still favoring an increase in May, an increase in June, and then a holiday until 2nd quarter data come in. David Altig's analysis of the futures markets concurs. Since I think the next quarter will not be this good, I expect the holiday to be extended.
Why will it be extended? One word: housing. Bernanke thinks so. When even the industry people are saying "soft landing", there is only one direction it can go.