Cathie Wood, the CEO of Ark Invest, has recently highlighted a significant deflationary trend in the United States. As a result, Wood suggests that the Federal Reserve may need to consider cutting its key interest rate. In an interview with Bloomberg TV, Wood emphasized the risk of deflation and expressed her belief that the Federal Reserve has gone too far.
Wood has observed deflationary tendencies in various sectors, beginning with commodities. Additionally, she anticipates that the consumer price index (CPI) will continue to decline and even dip below the Fed's targeted 2% rate.
Looking ahead, Wood expects a persistent trend of deflation. Notably, she suggests that CPI inflation may venture into negative territory at some point next year. In October, the consumer price index remained unchanged, while the annual rate of inflation decreased to 3.2% from 3.7%.
Despite these concerns, U.S. stock markets exhibited positive growth on Wednesday morning. According to FactSet data, the Dow Jones Industrial Average (DJIA) rose by 0.4%, the S&P 500 (SPX) gained 0.5%, and the Nasdaq Composite (COMP) advanced by 0.6%.
The potential implications of deflation in the United States and its impact on the Federal Reserve's decision-making will be crucial to monitor in the coming months.
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