RE:How to get inflation down
garyreins wrote: Something Trump will get. Bring OPEC to the table. Ramp up the supply. Dives to 50 to 60 a barrel. Even if services is sticky that'll give automatic win on headline and you can sell inflation is 2% or lower.
Ill throw in my 2 cents.
The economy is in a soft landing until.... drum role pls
Households and corporates have to refinance their debt.
Then we get a disinflationary recession that could lead to deflation as it did during the GFC.
Canada was hit harder than the US because mortgage renewals occurred a lot sooner. Put another way, Canada is more interest rate sensitive and it makes a lot of sense for them to cut first.
Owner occupied homes in the US are in decent shape because many refinanced at low interest rates during the pandemic. However, home ownership costs are increasing due to home owners insurance, HOA fees, property taxes etc. Tenant occupied households are doing poorly as rent payments have significantly outpaced their wages. Many of these individuals are living paycheck to paycheck and relying on their credit cards and buy now pay later schemes. Credit card delinquencies are on the rise so we need to pay close attention to this.
I do believe rates are working but it just takes time for monetary policy to work. I often use the analogy of a faucet turning from cold to hot. The water doesn't change temperature right away but give it a minute or two and then it'll work. The challenge for central bankers is how to fine tune the temperature between cold and hot so that the economy can thrive.