Deep inflation drop: should the market rejoice or be cautious?

Inflation in June 2023 fell to 3%, with m/m growth at the lowest in 28 months. This is a positive signal for the Federal Reserve's battle against inflation. At the same time, it also affirms the power of the central bank's interest rate and monetary tools in regulating the economy.

However, while the market is celebrating this good news, as a financial economics blog aimed at informing and warning about potential risks, Viet Hustler wants to offer a more objective view on the current pace of inflation decline. 

In this weekend's macroeconomic analysis article, the Viet Hustler author team examines 3 reasons that could cause CPI growth to drop rapidly: consumer strength from the demand side, wage-price spiral in the labor market, and the Fed's interest rate hike speed. 

From there, Viet Hustler will provide in-depth analysis of the potential dangers to the economy following the current sharp drop in inflation. 

Disclaimer: The views below may reflect the personal opinions of the author; the risks below may not fully occur or may not occur at the same time. 

Key highlights in the June 2023 CPI report