Sumitomo Mitsui Economist Warns Inflation Slowdown Essential to Preserve Fed Credibility

According to Jin10, Joseph Lavorgna, chief U.S. economist at Sumitomo Mitsui Bank, warned on July 22 that policymakers risk losing hard-earned credibility if inflation fails to cool. Lavorgna noted that over the past 70 years, core inflation has declined year-over-year by 0.9% or more only six times, and in each instance the slowdown resulted from Federal Reserve policy tightening. He cautioned that the longer the Fed delays action, the greater the likelihood rates will need to rise above necessary levels, a pattern that has historically ended prior tightening cycles poorly.
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