The slowdown in inflation provides a reason for the Federal Reserve to lower interest rates

According to Jin10's report, Phillip Colmar, Managing Partner and Global Strategist at MRB Partners, said that the PCE data released last Friday showed that inflation continued to slow down, providing a reason for the Fed to cut interest rates in the future. However, a bigger concern for the Fed is whether the super core indicator (excluding rental service industry inflation) has cooled down. This indicator is related to wages. Unless we enter a weaker growth environment below trend, causing wage growth to deteriorate significantly in the coming months, service industry inflation will remain sticky.

In the past eight weeks, relaxed financial conditions have made next year's economy appear not much lower than trend levels, which means wages will not decline significantly. Inflation may eventually bottom out around mid-next year and be far higher than expected by the Fed.