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Guy LeBas observes that it has become popular among market strategists to suggest that inflation remains above target due to strong economic growth.
However, he points out that consumer price index (CPI) readings are currently declining to the lowest level seen in five years.
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LeBas has previously projected that July core PCE would rise 0.27 percent month over month based on recent inflation data, according to his analysis. In a separate note, he observed that markets were pricing a 40 percent chance of a U.S. rate hike in September with limited policy guidance at the time. These views offer context to his latest comments on inflation trends.