Read for the Fed Preview. Stay for the Trouble Brewing in the Mortgage Market.

June 14, 2022 12:00 pm ET

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Fed Chairman Jerome Powell, shown at his postmeeting press conference last month, has had to recalibrate assertions that the central bank can cool inflation without causing recession. Jim Watson/AFP via Getty Images

Recent inflation data are something of a game-changer for monetary policy. Expectations for what will come out of the Federal Reserve’s meeting this week and beyond have quickly ratcheted higher, spelling more pain for financial markets and the economy. 

Before last week’s consumer price index showed prices rose 8.6% in May from a year earlier, a fresh 40-year high, investors were sure the Federal Open Market Committee, the Fed’s policy-setting arm, would raise interest rates by another 0.5% on Wednesday. After all, Fed Chairman…

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