The Fed has been raising interest rates for the last 21 months with the idea that it wanted to slow growth in order to prevent inflation. It has now begun the process of selling off assets, which will also have the effect of raising interest rates and slowing growth.

While the need to slow growth is premised on the fear that inflation will rise to a higher than the desired rate, the data refuse to cooperate. The Bureau of Economic Analysis released data for the personal consumption expenditure deflator (PCE) this morning. The year over year rate of inflation in the core PCE, which is the focus of the Fed, fell to 1.3 percent, from 1.4 percent in July. (The annualized rate for the last three months compared to the prior three months was slightly higher at 1.4 percent.)

Anyhow, it is difficult to see any basis for the Fed's concern that the inflation rate will exceed its target of a 2.0 percent average rate. At least for now, it is going in the wrong direction.