Fed Inflation & Interest Rate Bind Simulator

Macro Policy Drivers

Shelter CPI (Weight ~30%) 4.80%

Services ex-Shelter (Weight ~28%) 4.20%

Energy Price Change (Weight ~7%) 2.50%

Core Goods CPI (Weight ~20%) 1.20%

Fed Policy Benchmarks

Current Fed Funds Rate 5.25%

Neutral Rate (r*) 2.75%

Unemployment Rate 4.10%

Sticky CPI Stack vs 2.0% Target Weighted Drivers

Projected Treasury Yield Curve Shift Maturity vs Yield (%)

Federal Reserve Policy Bind Evaluation Hawkish Hold / Tightening

With sticky inflation reaching 3.95%, driven predominantly by shelter and non-housing service momentum, the Fed's inflation target of 2.0% remains well out of reach. The Extended Taylor Rule indicates an implied policy benchmark of 5.75%, restricting central bank scope for monetary easing despite rising unemployment pressures.

Debt Servicing Impact

+1.40% High Yield Spread

Financial Conditions Index

100.8 (Tightening)

Term Premium Adjustment

+42 bps Expansion