Asset Bubble or the Fed's inflation target?

SMM: inflation has always been a problem for the Federal Reserve. After adjusting to the average inflation target of 2 per cent, expectations for the Fed to reach its inflation target remain low.

Art Hogan, chief market strategist at National Holdings, says inflation has been a mystery for the Fed over the past decade.

"under the extremely loose monetary policy, there is obviously a risk of the emergence of asset Bubble, but it is very difficult to really promote inflation."

Before the epidemic, when the unemployment rate in the United States was only 3.5%, inflation in the United States failed to reach 2%. Now that the unemployment rate in the United States is as high as 8.4%, the inflation target has obviously become more difficult to achieve.

Marvin Loh, senior macro strategist at State Street, said low interest rates over the past decade had pushed asset prices higher, but not broader inflation.

"I don't think we need to worry about Bubble right now, but if this situation continues, Bubble will happen, maybe in 2022."

The price-to-earnings ratio of the index is now around 21.7, half of what it was during the Bubble era of the Internet in 2002.

For now, however, the market is more worried that the Fed has few tools at its disposal while the US economy is still under tremendous pressure.

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