The Fed Is ‘Attempting Something Unprecedented’ as It Navigates Massive Inflation Drop

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As an analyst with over two decades of experience in global financial markets, I find myself both intrigued and cautiously optimistic about the current state of the U.S. economy. The drop in inflation to 2.4% is indeed unprecedented since the 1980s, and it’s a testament to the Federal Reserve’s monetary policy decisions, albeit aggressive ones. However, the rise in core CPI inflation to 3.3% in September is concerning, especially when paired with an indicator pointing towards an incoming recession.

Over the past two years, the U.S. Federal Reserve is striving to achieve something unparalleled, as inflation in the nation has significantly decreased by an impressive 5.8%. This marks the steepest decline since the 1980s, with the current rate sitting at 2.4% in September.

As per the economic analysis by Kobeissi Letter on social media platform X (previously known as Twitter), the current decrease is more significant than the fall witnessed during the 2008 Financial Crisis. Furthermore, they pointed out that such a substantial drop has rarely occurred outside of economic recessions.

After a historically robust series of rate increases, where the Federal Reserve raised rates from nearly zero to 5.5% over a span of 16 months, a significant reduction in interest rates ensued.

Over the last two years, the rate of inflation in the U.S., as measured by the Consumer Price Index (CPI), has plunged by an astounding 5.8 percentage points – the largest decrease since the 1980s, reaching 2.4% in September. This decline is even more substantial than the one observed during the 2008 Financial Crisis. Previously, a similar drop has…

— The Kobeissi Letter (@KobeissiLetter) October 17, 2024

The news source mentions that the main Consumer Price Index (CPI) inflation increased to 3.3% in September, marking the first rise since March 2023. This economic indicator, which is causing concern in the United States, suggests an upcoming recession based on its past accuracy over the last 75 years.

Regarding those metrics, instead, Jamie Dimon, CEO of JPMorgan Chase, expresses concern over the current global economic scenario due to escalating geopolitical risks stemming from what he refers to as a “dangerous alliance,” suggesting that circumstances are growing increasingly hazardous.

He noted that inflation is moving down and the US economy seemingly avoided a recession, although “several critical issues remain,” including “large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”

For more than a year, Dimon has consistently sounded the alarm about geopolitical instability, referring to it as the greatest danger facing the global economy. In his recent remarks at the Financial Markets Quality Conference in Washington, he referred to Iran, North Korea, and Russia as a formidable alliance that could reasonably be described as malevolent.

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2024-10-19 03:44