As the Federal Reserve wraps up its two-day policy meeting, investors are questioning whether inflation - specifically higher wages - are here to stay, or if rising prices for milk, lumber, and everything in between is a transient phenomenon that the Fed will continue to overlook.
"They're really caught between a rock and a hard place," Real Money contributor Stephen "Sarge," Guilfoyle told TheStreet's Corey Goldman. "They have to figure out if they are buying their own story about whether inflation is transitory."
On the one side are rising prices for goods, something that investors and consumers alike have noticed in grocery stores, in restaurants, and even at the pumps. On the flip side is an ongoing demand for workers that has placed upward pressure on wages - something Guilfoyle and Real Money contributor Tom Graff see as an issue.
What's more, monetary policy is at a point where it's no longer doing anything to prop up the economy. At the same time, a record amount of cash and low-interest rates still haven't left consumers', banks' or businesses' pockets - meaning the Fed is going to have to shift their outlook and expectations in order to communicate their next move.
"Powell needs to on the one hand acknowledge the inflation that is here right now, or it's going to come off as a little tone-deaf, but on the other hand he needs to stick to this transitory message - I see what you see, but it's only transitory. However, that's a card they're only going to be able to play once."
For more on what investors should be watching for from this Federal Open Market Committee and how they should position their portfolios, watch the video above.
Related: Inflation: What Experts Are Saying
Editor's note: TheStreet's Anuz Thapa contributed to the video reporting.