Fed/Bernanke probably concerned about core CPI going so high and making ‘popular’ headlines and is worried about cutting 50 into the triple negative supply shock of food/fuel/import-export prices.

And with today’s claims number showing, there may not be as much slack in the labor markets as the last unemployment number indicated. The fed has been counting on slack in the labor markets to keep wage demands in check and not transmitting headline inflation to core inflation via higher wages.

And now that core has in fact started to move, he’s pushing for a fiscal package (which goes against the mainstream grain/fiscal responsibility, etc.) as an alternative to future rate cuts which carry, in mainstream theory, an inflation price.

He would very much like the planned January 30 cut to be the last one needed. He doesn’t want to be the next Miller or the next Volcker.

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