The Fed is expected to hold interest rates where they are when the board meets this week. There is still talk of interest rate cuts later in the spring or summer.

Are we the only ones looking at commodity prices?

They are headed back up again and over the last year diesel, cotton, gold, and others are up more than 10% over the last year with much of the rise in the last few months.

This is a LONG way from the Fed’s 2% inflation target.

Commodities are our forward-looking indicator of inflation in commodity prices because these prices are recorded and updated in real-time (whereas the CPI is about 30 days lagged). Commodities are also an input into everything that is produced – so when the prices of copper and oil rise – so does the price of groceries, manufactured goods, transportation, etc.

What this is telling us is there is NO case now for interest rate cuts and if these spiraling costs continue, the Fed should keep selling assets on its multitrillion-dollar balance sheet and Congress should cut spending by at least 10% across the board.