Inflation data reinforces need for Fed to hike by 100 bps, says former Trump economist

• Core PCE inflation rose 3.3% year-over-year in April, a nearly three-year high.
• Lavorgna advocates for at least 100 basis points in Fed rate hikes to offset the collapse in real interest rates and address inflation moving towards 4%.
• He notes that financial conditions (equity averages, credit spreads) are currently loose, and inflation is primarily a supply-side issue, not just demand-pull or cost-push.

Former Trump economist Joe Lavorgna argues the Federal Reserve needs to hike interest rates by 100 or more basis points to combat rising core inflation, which hit a nearly three-year high of 3.3% in April. He highlights that financial conditions are not tightening despite inflation moving towards 4%, driven by supply chain disruptions and surging energy costs.