Harvard Economist Warns of Inflation Challenges

In a recent appearance on "Mornings with Maria," Harvard economist Kenneth Rogoff expressed his astonishment at the rising grocery prices, despite his expertise in inflation. Rogoff acknowledged that while inflation has decreased to its lowest level in over three years, consumers continue to face increasing costs for food and energy. He emphasized that prices are unlikely to decline, making the current economic situation difficult for many to comprehend. Rogoff's comments came in response to the Consumer Price Index (CPI) report, which indicated that inflation is falling but not sufficiently to alleviate the burden on consumers. He remarked that the CPI report does not significantly influence the Federal Reserve's decisions, suggesting that the Fed may have preferred to implement a rate cut in July. He noted ongoing disagreements within the Fed regarding future monetary policy directions. Joe Brusuelas, chief economist at RSM, weighed in on the Fed's potential actions, stating that while an emergency rate cut is not anticipated, the recent market volatility has strengthened the case for a substantial 50 basis point reduction in the upcoming meeting. Rogoff concluded by asserting that the Fed must come to terms with the reality that achieving a 2% inflation rate is unlikely without triggering a recession. He highlighted that the risk of a recession is now more pressing than the possibility of inflation rising to 4%.