We're in complete deflation territory: Economist
The Fed's preferable gauge of inflation, PCE, rose less than expected in February, slowing to 5% annually versus 5.3% in January.
As the first quarter comes to an end, several economic headwinds still persist; UBS Chief Economist Paul Donovan told Yahoo Finance Live that the major theme for the quarter was, "the development in terms of inflation."
"So much of the inflation story is behaving exactly as expected...we're in complete deflation territory," he explains. "What we're left with, is in certain sectors, companies expanding their profit margin; telling customers 'we've got to pass on these price increases,'" he says. "But they're not passing on the price increase," he continues.
"Frankly, it's something which I think the Powell Fed has not really properly addressed," he adds.
You can watch Brad Smith and Rachelle Akuffo's full interview with Paul Donovan here.
Key Video Moments:
00:00:14 - Key theme of Q1
00:00:37 - Deflation vs. disinflation
00:01:08 - Companies expanding profit margins