Atlanta Fed Business Inflation Reading Down Sharply

One indication that may have an even greater dovish effect on monetary policy than this morning's soft retail sales report is this morning's business inflation reading from the Atlanta Fed which is down a sharp 2 tenths to 1.8 percent for the lowest showing since October 2017.

On its own, this indicator would likely have only incremental effect on policy were it not combined with last week's 3 tenths drop in consumer expectations to 2.5 percent as measured by the University of Michigan.

The tandem moves in these reports, likely reflecting the general sinking in global demand and related trouble for US manufacturing, are certain to be pointed to with concern by those Federal Reserve policy makers who, routinely citing the primary importance of expectations in inflation policy, see risks to the economy tilted to the downside and see the need for further rate cuts.