Analyst: The Federal Reserve's decision-making mechanism is spiraling out of control due to Walsh's "delegation of power"; October data shows inflation may be temporary.

Wellington-Altus strategy analyst James E. Thorne pointed out in his latest report that the Federal Reserve’s scrapping of forward guidance and dot plot, along with its original goal of allowing officials to freely express policy preferences, has not resulted in disciplined policymaking. Instead, it has handed the microphone to hawkish officials, whose irresponsible remarks are now dominating market expectations and leading to inconsistent policy. The central bank must clearly distinguish between fading supply-side shocks and persistent demand pressures, rather than letting the loudest voices drive its decisions. Taking October CPI data as an example: overall month-on-month inflation rose 0.4% (down from 0.6% the prior month), while core CPI came in at 0.3% (flat with the previous reading). Trends matter far more than one-month fluctuations; merely because the data exceeded expectations by 0.1 percentage point, Fed Governor Christopher Waller floated a trial balloon for a 50-basis-point rate hike in December—this is clearly overly reckless. More critically, examine inflation’s internal structure: services make up nearly 90% of core inflation, with housing accounting for half of that. Owner Equivalent Rent (OER) is essentially an estimate, not an actual outlay by homeowners. The current housing shortage is not a "wage-price spiral" at all, and aggressive rate hikes will instead push up construction costs and lock homeowners into their existing low-interest mortgages—this so-called "cure" will only exacerbate the problem. Meanwhile, energy shocks are receding substantially. With softening energy prices and falling labor costs, the Fed needs sharp judgment, not reflexive tightening. Forcing rate hikes amid strong productivity could easily turn a temporary inflation shock into an unnecessary recession.