CPI Inflation Report: Fed Cutting Rates, Money Printing Next!

Despite recent CPI inflation reports showing headline and core inflation at 3%, the Federal Reserve is highly likely to cut interest rates, end quantitative tightening, and potentially resume massive money printing by 2026, which is expected to worsen inflation.

• The Federal Reserve is likely to cut interest rates despite inflation remaining above target.

• Quantitative tightening is expected to end soon, potentially paving the way for future money printing.

• Actual inflation felt by Americans appears significantly higher than official government reports, with costs like groceries rising.

The September CPI report revealed both headline and core inflation at 3%, which is above the Federal Reserve's 2% target. Despite this, the Fed is expected to cut interest rates, justifying it by claiming inflation is 'transitory' and cuts are needed to support labor markets. JPMorgan forecasts an earlier end to quantitative tightening, suggesting money printing could follow, potentially in 2026, leading to a projected worsening of inflation.

Federal Reserve Rate Cut

• 00:01:03 Despite inflation rates increasing after bottoming in April and remaining above the 2% target, the Federal Reserve is still expected to cut interest rates at its upcoming meeting. This decision is based on the belief that the inflation situation is temporary or 'transitory' and that an interest rate cut is necessary to prevent further weakness in the labor markets. Before the September CPI report, there was a 98.3% chance of a 0.25% rate cut, which only slightly shifted to 96.7% after the report's release.

End of Quantitative Tightening

• 00:03:09 The Federal Reserve is currently engaged in quantitative tightening, or 'balance sheet runoff,' to remove money from the system and slow inflation. However, Fed Chair Jay Powell has hinted that this tightening cycle will end soon, with JPMorgan now predicting it could conclude this month rather than early next year. This shift is significant because the cessation of quantitative tightening typically precedes the start of quantitative easing, or 'money printing,' which is projected to occur massively, possibly by 2026.

December Rate Cut & Fed Credibility

• 00:04:05 Beyond the immediate rate cut, there is a high expectation for another quarter-point interest rate cut at the December meeting, bringing the Fed Funds rate from 4.25% down to 3.75%. This persistent expectation of future cuts highlights the Federal Reserve's ongoing struggle to achieve its 2% inflation target, as reporters have questioned the Fed's credibility, pointing out that their projections for hitting the target 'two years later' have consistently failed since 2015.

Inflation Reality vs. Official Reports

• 00:05:00 While the U.S. government reported September's CPI inflation at 3%, a significant discrepancy exists between official figures and public perception. Many Americans, regardless of political affiliation, are not experiencing 0% inflation as suggested by President Trump's past statements; instead, a large majority report increased monthly household expenses, with groceries being the primary driver. Personally, the real rate of inflation is estimated to be around double the government's reported figures, a situation expected to worsen with further rate cuts and future money printing.