- According to veteran economist Steve Hanke, the United States no longer has an inflation problem.
- “I think the story of inflation has become history, partly because the money supply in the US is down 4% year-on-year,” said Hanke, a professor of applied economics at Johns Hopkins University. rice field. he told CNBC’s Street Sign Asia on Thursday.
- “We haven’t seen anything like this since 1938,” Hanke added.
According to veteran economist Steve Hanke, the United States no longer has an inflation problem.
“I think the story of inflation has become history, partly because the U.S. money supply is down 4% year-on-year,” said Hanke, a professor of applied economics at Johns Hopkins University. rice field. He told CNBC’s “Street Signs Asia” on Thursday.
“I haven’t seen anything like this since 1938,” Hanke said. “Changes in the money supply cause changes in the price index and inflation.”
Prices displayed in New York City grocery stores on February 1, 2023.
Leonardo Munoz | Corbis News | Getty Images
U.S. inflation was lower than expected at 3% in June, released Wednesday, the lowest year-on-year rate of increase in two years. The core consumer price index, which excludes volatile food and energy prices, rose 4.8% from a year earlier and 0.2% from the previous month.
The latest data could give the Fed some leeway in setting its rate policy direction.
The US producer price index is due to be released later on Thursday. Any indication of falling prices could further influence the Fed’s decision to end the rate hike cycle early.
According to the newspaper, traders see a 92.4% chance that the Fed will keep rates unchanged at its July meeting. CME fedwatch tool.
“When inflation was going and roaring, first the producer price index roared, then the consumer price index roared, and finally, like a snail, the core gradually has risen to ,” he said.
Forget all the propaganda we hear. The Fed chairman has a difficult problem, this is going to be a long game, things are messy, etc. Not sticky.
Steve Hanke
Professor, Johns Hopkins University
“Now we have turned things around, producer prices are falling like a stone. Consumer prices are falling like a stone, too. And the core lags far behind.” He said, adding: As long as they continue to tighten quantitatively, all of this will go away. ”
Central bank policymakers tend to focus on core inflation, which remains well above the Fed’s 2% annual target.
But Hanke said that if the Fed “continues with what it’s doing,” rates could reach “the 2% range fairly quickly.”
“Forget all the propaganda we hear about the Federal Reserve chairman having a difficult problem, this is going to be a long game, things are hard. No,” the professor pointed out.
— CNBC’s Jeff Cox contributed to this article