Barkin Q&A: ‘Last mile’ of inflation may still take longer than expected

• US debt level is a concern in the long term
• Worried price pressure could get ‘stuck’ next year
• Sees two further quarter-point cuts this year as a ‘reasonable path’ if economy evolves as expected
• Expects unemployment and inflation to stay roughly stable for the rest of this year
• Sees renewed tight labor and demand spurred by Fed rate cuts as possibly keeping inflation lodged above 2% next year
• Current rate cuts a proper recalibration of policy, but full normalization would require inflation to hit 2%

Translation: He’s willing to cut for awhile but won’t cut to 3.00-3.50% until inflation hits 2%. Given the cadence of Fed cuts, there is plenty of time to cut before we get there.

This article was written by Adam Button at www.forexlive.com.