While it is too early for the Federal Reserve to declare victory on inflation, there are good reasons to believe that it will continue to cool, according to...
With central bankers heading to Jackson Hole, Wyo., this week for the Federal Reserve’s most important economic policy event of the year, officials have seemed to “draw a line in the sand” on inflation, as there are reasons to believe that four-decade-high inflation will continue to cool while recession risks are rising, a JPMorgan strategist said in a note Monday.
According to David Kelly, chief global strategist at JPMorgan Asset Management, the July CPI report, which showed inflation dropping 0.6% from its June peak for a year-over-year rate of 8.5%, offered some hope that inflation is cooling down.
However, the minutes of the July FOMC meeting showed that Fed officials agreed that it was necessary to move their benchmark interest rate high enough to slow the economy to combat high inflation and then bring it back down to its 2% target. But according to JPMorgan, the danger of recession has already exceeded the risk of inflation, and staying at current levels could inflict long-term economic damage.
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