Insights on U.S. Inflation: Michael Stark's Perspective on the Third Quarter Trends
Aa
Share
In a recent interview with FXMAG.COM, we had the privilege of discussing the current state of inflation in the United States with Michael Stark, an experienced analyst from Exness. As inflation has been a hot topic of discussion and concern for both investors and policymakers, we sought Stark's insights on whether the downward trend in inflation will continue in the third quarter.
According to Stark, unless there are any significant unforeseen events, it is likely that inflation will continue to fall in the U.S., albeit not by a substantial margin. He points out that American non-core inflation has been steadily slowing since the previous summer, with monthly fluctuations showing some variability.
One of the primary factors contributing to the deceleration in inflation is the strong cycle of monetary tightening, which has been one of the most robust in history. Coupled with the relatively steady price of oil compared to the previous year and supply chains returning to a semblance of normalcy for most products, the pressures on inflation have become less evident. Additionally, weaker job data in the USA, traditionally considered a significant driver of inflation, have also played a role in the moderation of price increases.
FXMAG.COM: Will inflation continue to fall in the U.S. in the third quarter?
Barring some exceptional event, yes, but maybe not by very much. American non-core inflation has slowed consistently since last summer although the monthly declines in the rate have been somewhat variable.
This has been one of the strongest cycles of monetary tightening in history and, combined with the price of oil remaining relatively steady compared to last year and supply chains back to normal or something resembling normal for most products, the biggest pressures on inflation are much less clear now. Job data in the USA – traditionally cited as being a key driver of inflation – have also been weaker overall since the second quarter.
However, it’s probably too early to start expecting a return to 2% inflation even by the end of the year. Now that the Fed is likely to pause hikes and possibly start cutting in the second quarter of 2024, we might see inflation stick above the old target. Inflation is quite unpredictable more than a few months ahead, but holding PMIs might suggest that it could remain above target for longer.
