U.S. inflation for the month of April, measured by CPI, stands at 3.4%. In order for the Fed to consider rate cuts, CPI needs to find a path towards 2%, which is what the Fed considers (arbitrarily) price stability. The chart below provides 4 mathematical paths for CPI based on MoM increments. If we continue the path we’ve had over the last 3 months, with monthly increases of 0.4%, inflation will be at 4.6% in November. Absent major deflationary forces, in order for inflation to reach the 2% target, we will need monthly increases in prices of 0.1% or less, consistently. Since this is difficult to occur, the Fed is looking at core PCE, and other measures that provide a more comfortable reading. As time passes, and we get closer to Election Day, the probability of getting any rate cuts this year is approaching zero.
Want to know more? join Fund@mental here https://apps.apple.com/us/app/fund-mental/id1495036084
#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning
