NEC Dir. Hassett: ‘Inflation Is Clearly Decelerating’

EXCERPT:

HASSETT: "Well, of course, we have very high regard for Chairman Warsh and respect the independence of the Fed, so I’m not going to second-guess the move that they may or may not make. But the thing that I can say is that if you look at the stochastic processes that drives inflation, it's not really like a long memory process, it's a short memory process, which means that over the last few months, you get a signal that makes you think best about what’s going to happen in the months to come.And if you go back three months, then core CPI was at 3%. If you look at the last three months, even with this slightly disappointing number, core CPI is 2. So in the model that I would be using, I would say that you just about hit the target and inflation is decelerating. Now, what the Fed decides to do, maybe they decide they’re gonna do something that put risks on this side or that side, it’s up to them, but frankly, I think the inflation is clearly decelerating, even with the slight uptick this month. If you look at three-month average, then you’re basically hitting the core target."