Inflation at 0.0

The Consumer Price Index data that measures inflation was released today. Inflation is at 0.0% year over year.

Last year at this time inflation was peaking, so this months CPI data is being compared to a peak. Still, inflation hawks and anti-Fed fear mongerers have to be laughing at themselves. Inflation is not currently a problem and won't be for sometime, if at all.

There are two reasons for this. First, the Federal Reserve has very powerful tools to combat inflation. But, even if these are not enough, the Fed will most likely sacrifice low unemployment to maintain low inflation rates. What we need to be worried about is not inflation, but rather that the Fed has to back off of easy monetary policy before unemployment returns to acceptable levels.