FEZ - Most Economic Indicators Tell Me The Fed Should Cut Rates Sooner Not Later

2024-02-20 20:20:00 ET

Summary

• The biggest economic news last week was that the Labor Department reported on Tuesday that the Consumer Price Index (CPI) rose 0.3% in January and 3.1% in the past 12 months.
• Overall, the annual pace of the CPI continues to decelerate, but not at the pace economists had anticipated.
• China’s producer price index plunged -2.5% in January. Since the U.S. is importing deflation from China, the Fed must be careful, because global deflation is spreading.

When it comes to deciding when to begin cutting key short-term interest rates, it seems to me that the Federal Reserve seems overly fixated on small monthly variations in various inflation indicators rather than paying attention to the dramatic slowdown in the U.S. economy.

In my view, they should start cutting rates no later than May 1 ^st , rather than June, which most pundits and Fed spokesmen now predict....

For further details see: