No-show inflation poses conundrum for US Fed

Washington

AFTER tightening monetary policy last month for the second time this year, the US central bank is expected to pause for the next few months to monitor developments. The Federal Reserve will leave the benchmark interest rate untouched when it meets on Tuesday and Wednesday, partly because it has yet to begin to wind down its huge stock of bond holdings, and will not make another move on interest rates until that process is under way.

But the Fed also faces a growing conundrum as it waits for signs of the long-absent inflation to finally appear.