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Funny Numbers Correction

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I have spent some time on the phone with the director of research of ECRI discussing the data that we used to write our piece on inflation.

It turns out that the index devised by ECRI is not an inflation rate, it is a leading indicator: a turning up of this index would indicate a future pick up in the CPI.

So saying that the ECRI index was indicating an annual inflation rate of 9.9% was incorrect. It is actually the percentage change in the expected inflation rate.

It is still apparent that the ECRI index has deviated substantially from the Fed funds rate, but the conclusion that the Fed has kept rates low in the face of rising inflation is not as strong.
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