Moody’s Analytics' Mark Zandi Says Inflation Could Be Cut in Half Within Six Months

Over the next six months, Moody’s Analytics’ Mark Zandi anticipates that consumer price inflation (CPI) could fall from its current rate of 8% year-over-year to nearly 4%, but that deceleration depends on steady oil prices, the resolution of supply chain obstacles, and more stable vehicle prices, CNBC reports. The Federal Reserve’s aggressive policy tightening seems to be creating a more balanced economy, says Zandi, and declining prices paired with strong job growth should prevent a recession in the year ahead.

While the Fed continues to introduce new rate hikes to further slow a cooling housing market, Zandi predicts that rates could reach a standstill around the 4.5% or 4.75% level this winter as a market correction creates more economic stability. 

He expects the Fed to pause hikes around the 4.5% or 4.75% level this winter.

“Then, I think they stop and they say, ‘hey, look, I’m going to stop here. I’m going to take a look around and see how things play out,’” Zandi said. “If we get into next summer and things are sticking to my script, then we’re done. We just hit the terminal rate. They’ll keep the funds rate there until 2024. But If I’m wrong… and inflation remains more stubborn, then they’ll step on the brakes again and then we’ll go into recession.”

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