Joseph Lavorgna, Sumitomo Mitsui's chief U.S. economist, said in a report that failure of inflation to slow would cost Fed policymakers credibility. Over the past 70 years core inflation has fallen YoY by 0.9 pct or more only six times; in each instance the slowdown followed Fed tightening. Lavorgna warned the longer the Fed waits the more likely rates will have to be raised above the necessary level, raising the risk of a damaging end to the tightening cycle, and said Chair Walsh understands th

Joseph Lavorgna, Sumitomo Mitsui's chief U.S. economist, said in a report that failure of inflation to slow would cost Fed policymakers credibility. Over the past 70 years core inflation has fallen YoY by 0.9 pct or more only six times; in each instance the slowdown followed Fed tightening. Lavorgna warned the longer the Fed waits the more likely rates will have to be raised above the necessary level, raising the risk of a damaging end to the tightening cycle, and said Chair Walsh understands this.