The President and founder of Bianco Research LLC., Jim Bianco, is sounding the alarm on inflation, pointing to a recent surge in a real-time inflation metric as a challenge to hopes for Federal Reserve rate cuts.<\/p>\n
In a series of posts on X, he argued that recent data, combined with larger structural changes in the economy, suggest the U.S. may be settling into a new normal where a 4% neutral interest rate is the standard.<\/p>\n
Truflation Inflation Index Flashes A Red Flag<\/p>\n
Bianco\u2019s immediate concern was sparked by the Truflation U.S. Inflation Index, an independent gauge that provides daily updates. On Aug. 31st, the index hit 2.31%, a seven-month high that he said was \u201cflashing a yellow to red flag on inflation.\u201d<\/p>\n
While the index was revised down to 2.00% the following day\u2014a regular occurrence at the start of a month\u2014the initial spike highlighted the renewed upward pressure on prices. Bianco questioned whether the Fed could proceed with rate cuts if such trends continue.<\/p>\n
See Also:\u00a0Christopher Waller Supports 25 Bps September Cut After Dissenting For Same In July: Economist Asks Why Not 50 Bps This Time?<\/a><\/p>\n A New Normal With 4% Neutral Funds Rate?<\/p>\n Beyond the daily data, Bianco argued that the post-COVID economy represents a fundamental regime shift. He presented charts showing that inflation, real yields, and the real funds rate are now operating at a significantly higher and more volatile level than in the recovery periods following the 9\/11 attacks and the 2008 financial crisis.<\/p>\n This structural change, he contends, marks \u201cthe end of the era of low inflation and zero to negative real interest rates.\u201d Based on this new landscape, Bianco suggested a major recalibration is needed, stating, \u201cThis would imply a neutral funds rate of at least 4% if the Fed could hit its 2% target.\u201d<\/p>\n Second Inflation Mountain To Follow?<\/p>\n Adding to the cautionary tone, other analysts are also warning of resurgent inflation. Apollo Chief Economist Torsten Slok, in a chart shared by Mike Zaccardi, drew a parallel between the current inflation pattern and that of the 1970s.<\/p>\n Slok noted that after the first major inflation wave in the early \u201970s, a second, larger \u201cinflation mountain\u201d followed. The analysis raises concerns that the recent cooldown in price pressures might not be the end of the story, but merely a temporary lull before another significant surge.<\/p>\n Price Action<\/p>\n Meanwhile, experts still expect at least two rate cuts in 2025, bringing the interest rates below 4%<\/a>. But while markets celebrate the prospect of cheaper money, Creative Planning’s chief investment officer urged extreme caution, stating that when it comes to long-term predictions, Fed officials “don’t know any better than my seven-year-old.”<\/p>\n The CME Group’s FedWatch tool<\/a>\u2018s projections show markets pricing a 91.8% likelihood of the Federal Reserve cutting the current interest rates for the Sept. 17 decision. <\/p>\n The tool also projects a 95.8% and 99.2% chance of easing in October and December meetings, respectively.<\/p>\n The\u00a0SPDR S&P 500 ETF Trust\u00a0SPY and\u00a0Invesco QQQ Trust ETF\u00a0QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Tuesday. The SPY was down 0.78% at $640.03, while the QQQ declined 1.02% to $564.61, according to\u00a0Benzinga Pro<\/a>\u00a0data.<\/p>\n Read Next<\/p>\n Disclaimer:\u00a0This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.<\/p>\n Photo Courtesy: janews on Shutterstock.com<\/p>\n","protected":false},"excerpt":{"rendered":"The President and founder of Bianco Research LLC., Jim Bianco, is sounding the alarm on inflation, pointing to…\n","protected":false},"author":2,"featured_media":115438,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,64797,41004,11669,46,11668,64798,64799],"class_list":{"0":"post-115437","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-category-economics","12":"tag-category-news","13":"tag-cms-wordpress","14":"tag-economy","15":"tag-pageisbzpro-bz","16":"tag-symbol-qqq","17":"tag-symbol-spy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/115437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=115437"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/115437\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/115438"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=115437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=115437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=115437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}