On the Minds of Investors
Top questions on the minds of investors
See what your peers are asking and read answers from our team of Global Market Strategists.
August 16, 2019
Will rate cuts push inflation higher?
One of the reasons the Fed has justified cutting interest rates is the lack of inflationary pressures in the domestic economy. Indeed, core PCE has averaged just 1.6% over the past decade, below the Fed’s 2% target. However, it may soon find a few rate cuts to be unsuccessful in pushing prices higher. The reason being, the Fed does not have complete control over the drivers of both inflation and overall growth.
Velocity of M2 money supply
Ratio of quarterly nominal GDP to quarterly average of M2 money supply
Source: Federal Reserve Bank of St. Louis, BEA, FactSet, J.P. Morgan Asset Management. Data are as of August 12, 2019.