Be careful what you wish for, you might just get it.

Central bankers keep citing the lack of core inflation as their primary excuse for not normalizing rates and for keeping the button on the QE program. Almost $2 trillion for the ECB so far this year and no commitment to stop anytime soon. Taper? Maybe. I don’t believe a word they say.

Why? Because they remain trapped in their own construct.

Today’s data out of the UK highlights the global problem waiting to hit the entire planet.

Inflation suddenly jumped:

And it’s killing real wages of heavily indebted consumers who will have to allocate ever more of their incomes toward making interest payments:

The math problem is obvious and hence it’s no surprise that you hear even today, with these inflation numbers a BOE governor cautioning against an interest rate hike:

“Measures of domestically generated inflation are consistent with there still being some slack in the economy: they generally remain a little below levels consistent with the 2% target,” he wrote. “Despite continued robust growth in employment there is no sign of second round effects onto wages from higher recent inflation.”

Oh please. Speak the truth. You can’t raise rates without inviting a recession.

And they know. From the same article:

“A premature increase might be very contractionary, so a mistake there might be very costly” 

They know.

And hence watch Carney dance:

LATEST: Bank of England expects inflation to peak above 3% in coming weeks, Mark Carney says https://t.co/hYtfvo1Tb6 pic.twitter.com/6W3Pzao647

— Bloomberg (@business) October 17, 2017

No, things may actually be a lot more precarious than they let on as ever higher market prices keep the illusion alive.

Debt matters and central bankers, and by extension markets, may find themselves out of narratives and confronted with reality:

So wish for inflation as you please, just remember:

Every central banker has a plan until inflation hits them in the face.

— Sven Henrich (@NorthmanTrader) October 17, 2017

More macro charts in the Macro Corner.