Will the Fed Repeat Its Inflation Mistake?

The Federal Reserve finishes up its latest meeting this afternoon. But the verdict is practically a foregone conclusion: Based on recent statements from Fed Chair Janet Yellen and other Fed officials, markets think the odds of another interest rate hike are more than 80 percent.

In early March, Yellen said that "the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate." Sure enough, last week's jobs report showed reasonably strong employment growth and an unemployment rate of 4.7 percent. The Fed's inflation target is 2 percent, and its preferred measure of inflation is almost there at 1.7 percent. So observers believe another rate hike is practically inevitable.