Not enough inflation. That’s what the Fed is saying yet again.

FOMC Statement

“Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months”

The problem is, that like their innovative friends at the BoJ, which apparently thinks it is going to now engineer the Japanese yield curve into an inflationary environment, the US Fed is too heavily involved in the Treasury market. So I ask you if just maybe the signals they are looking for in bonds are all screwed up by their very presence in bonds, 24/7 and 365 since 2008? Hello Op/Twist…

So the TIP-TLT gauge and other market measures are not showing an ‘inflation expectations’ problem yet. Big deal. Costs and prices are firm across whole swaths of the economy. Healthcare, Professional Services, Housing and much to the suddenly lucid Eric Rosengren’s (he voted to hike today) consternation, Commercial Real Estate… all ramping ceaselessly.

So the Fed is noting that “market based” inflation signals are not registering. Big effing deal.

Here are the good people (or show ponies?) on the FOMC who voted to raise rates…

“Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.”