Cathie Wood: Inflation Could See Sharp Pullback, 'Implied Inflation' Only 0.5%

BlockBeats News, June 25th, Cathie Wood, the founder of Ark Invest, stated in a post that during her Asia and Europe roadshow, she noticed that investors still have strong concerns about inflation. However, she believes that inflation may see a significant drop, and the reason is not just the decline in oil prices. Measured by unit labor costs, the year-over-year inflation rate in the United States has dropped to 0.5%.

Cathie Wood stated that, as demonstrated in the 1980s and 1990s, productivity is a powerful force against inflation. The U.S. first-quarter productivity grew by about 3% year over year, and hourly wages increased by 3.5% year over year. Therefore, the "potential inflation" is 0.5%, and there is no cost-push inflation. Truflation, an index that tracks thousands of prices of goods and services in real-time, has dropped from 11% year-over-year in 2022 to 1.8%, and core Truflation has dropped to 1.4%.

Based on five studies commissioned by Kevin Warsh, she believes that Warsh not only understands the role of productivity in the inflation decline but also understands the flaws in government inflation statistics. Although others expect interest rates to rise earlier than a few months ago, Warsh will deliver a masterclass in monetary policy for the financial markets.