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One of the leading indicators Bank of England (BoE) uses to predict the future direction of goods inflation is the manufacturing producer price index (PPI) growth rate. The close relation, however, has broken down in the past year.
Core PCE inflation rose 4.7% in January YoY, beating expectation of 4.4% increase. The Fed-preferred price index rose 0.6% MoM compared to the market expectation of 0.5%.
Ahead of Jay Powell's keynote speech in Jackson Hole on Friday, two Fed officials said more rate hikes are still warranted, but they said it's too early to decide on the size rate increase yet.
Long-run stability of the velocity, or the filpside of it, money demand, however, is not a empirically founded assumption.