Net, net, the inflation outbreak is over and the overall picture of core consumer price pressures is quite benign, and even reminiscent actually of the spring and summer of 2019 before the pandemic struck. Any Fed official waiting for a little more data to make the decision on whether to cut interest rates got it in spades this morning as while inflation isn’t dead, there is deflation in commodity prices which balances out the moderate inflation seen in some services prices which is mainly generated from the higher costs of housing. In fact, many prices in the CPI index have shown no net change over the last three months. The risks for Fed officials at this point are more on the downside for the economy and labor markets rather than on the upside for inflation. We expect Powell to give a thumbs up for a rate cut at next week’s Jackson Hole meeting to rally the other Fed members and build a consensus for a first rate cut at the September meeting. Don’t forget the FOMC just moved from a tightening bias to a neutral, balanced one at the July meeting. Current Fed policy is not behind the curve, but there is no longer a reason to delay rate cuts as policy remains as tight as it was in the months before the Great Recession and not a good spot to be in with the clouds offshore darkening now that job losses are the most seen in any economic period outside of a recession. Over a million more Americans are out of work since the Fed started tightening its monetary policy and that is not a good thing for the outlook to be sure. The inflation flare-up at the start of the year is over and the era of sky-high Fed rates should be too. Bet on it. 0.165% core CPI inflation in July… is that all? Get on it Fed. Your recession-level interest rates are no longer needed.