Are High Commodity Prices Becoming a Problem for the Fed

About a month ago, HSBC Global Research noted a forecast for a 'weak' bull market in commodities. New data shows that the US Consumer Price Index CPI for April rose by .3% from the previous month and by 3.4% year-over-year. Although inflation is still increasing, it is doing so at a slower pace. Meanwhile, in Asia, Beijing is working to stabilize its economy. Amid these developments, commodity prices, tracked by Bloomberg, have reached their highest level in a year.

On a much larger timeframe, the BCOM index has retraced 50% of its total move from early 2020 lows during the onset of government enforced lockdowns spurred by Covid, and the blowoff top in the first half of 2022. Now BCOM is pushing higher, and this comes as Brent crude, one of the largest components of the index, has moved higher in recent months on a combination of stronger demand, tighter supplies, and disruptions in the Middle East due to multiple ongoing conflicts.

Commodities Inflation Federal Reserve Jerome Powell

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