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Friday morning's Wall Street Journal had a story with the headline, "Mounting Inflation Concerns Weigh on the Fed's Next Move." The article questioned how likely future rate cuts are given the mounting concerns among Fed officials that inflation may accelerate in the second half as the economy rebounds.

While we don't doubt that the Fed is closely monitoring inflation levels, we would argue that it has taken a back seat to the current issues in the credit and financial markets. Since August, the WSJ has run at least eight headlines (red dots below) questioning whether or not the Fed would continue to cut rates because of inflation concerns, and following each one, the Fed has cut rates.

click to enlarge

Source: Is Inflation Still Really a Major Fed Concern?