The Fed in the dilemma of suppressing inflation and protecting jobs

    On Wednesday, U.S. inflation soared, stock markets plummeted across the board, major indexes fell between 2% and 3%, Treasury bond rates and the U.S. dollar index rose, and the panic index continued to soar.

     If the market was only expecting inflation to rise before, then today's data from the Labor Department shows that U.S. inflation is really coming, and it has risen at the highest rate in 12 years. In April, the CPI and core CPI rose by 0.8% and 0.9% respectively, both significantly higher than expected. Investors are worried that rising inflation will hinder the process of economic recovery. Although the Fed has always emphasized that rising inflation is temporary and has not yet considered raising interest rates, today's data may prompt the Fed to change its loose monetary policy soon.

    High interest rates not only erode the value of future cash flows for growing companies, but also increase production costs, as well as borrowing costs for companies and individuals, which basically hurts all sectors. The market suffered a comprehensive sell-off, with sectors such as technology, raw materials, industrial, and utilities all falling by more than 2%, and the Consumer Staples sector fell as much as 3.4%.

    On the other hand, the weak performance of the market is also a complaint about the poor work of the Fed. The Fed's two jobs are full employment and inflation control. From the data in April, the job market is still in the cold winter, and inflation is overheating. The Fed needs to do more homework.