US inflation returned to growth today, albeit less than expected (3.2% instead of 3.3%), after 13 months of decline.
Core inflation was also better than forecast and continued its 10-month slowdown, coming in at 4.7% in July, while a reading of 4.8% was expected to show zero change.
In fact, everything is going according to the Fed's plan. Inflation is still strong and above the 2% target, so they can keep raising the rate but avoid a recession due to the strong US economy.
But there's a nuance... Every time during the rate hike cycle, the Fed promised a soft landing and the closer the recession got, the more claims there were that there wouldn't be one 😱
The current number of soft landing announcements is at its highest since 2000 and this indicator may work again because all the Fed, Ministry of Finance and top bankers' forecasts are not about what will happen.
It is about giving the market, i.e. investors, the right vector of movement 😉