In the next six months, the rate of inflation in the United States will be slashed in half, predicts Mark Zandi of Moody’s Analytics.
His prediction depends on oil prices remaining at present levels, supply chain issues continuing to alleviate, and vehicle costs beginning to roll over. It comes just before another significant inflation report.
The rest, in Zandi’s opinion, can remain unchanged.
According to the company’s chief economist, “CPI, the consumer price inflation, will decrease from something that is now about a low of over 8% year-over-year to something close to half that of 4%.”

On Thursday, the Bureau of Labor Statistics releases its consumer price index for September. The Dow Jones is forecast to increase by 0.3% from month to month and 8.1% from year to year.
The transition from 4% to the Fed’s goal will be difficult. The top end of that target for the CPI is probably 2.5%, according to Zandi. Therefore, the final 150 basis points (or 1.5 percentage points) will take some time to reach because they are related to the inflation of services, which is related to wages and the labour market. That needs to calm down, and that will take time.
Overall, according to Zandi, the Federal Reserve’s tightening of policy is moving the economy in the correct direction. According to his forecast, high prices should drop sufficiently to a recession.

“Job growth is beginning to slow down. The next phase is to get wage growth to slow down, which I believe will happen by early next year, he added. That is essential for broader service price inflation to moderate and for inflation to return to target.
This winter, he anticipates the Fed to stop raising interest rates at a rate of 4.5% or 4.75%.
“Then, I believe they stop and announce that they are going to stop here. Zandi replied, “I’m going to check around and see how things go. “If everything continues to go according to my plan by next summer, then we’re done. We’ve just reached the maximum rate. The funds rate will remain there until 2024.
But if I’m wrong and inflation continues to be stubborn, they’ll put the brakes back on and a recession will ensue.