Economist Kenneth Rogoff recently expressed shock at the rising cost of groceries, despite his expertise in understanding inflation. During an appearance on "Mornings with Maria," Rogoff highlighted the unusual state of grocery prices, stating that this is something that hasn't been seen in a long time. Despite a decrease in overall inflation, prices for food and energy continue to rise, leaving consumers feeling the pinch.
The Consumer Price Index (CPI) report released on Wednesday showed a rise in food and energy prices, further confirming the challenge faced by consumers. Rogoff commented on the report, noting that while it wasn't surprising, it does little to change the trajectory of the Federal Reserve's actions. He suggested that the Fed may cut interest rates in September, as recession fears resurface following global market instability and a weak July jobs report.
Rogoff's sentiments align with other Wall Street economists' predictions of a potential rate cut in September. Joe Brusuelas, chief economist at RSM, also weighed in, suggesting that while emergency rate cuts may not be necessary, a significant reduction in interest rates could be on the horizon given the recent market turmoil.
In light of the challenges posed by rising prices and the potential for a recession, Rogoff emphasized the need for the Fed to come to terms with the fact that achieving a 2% inflation rate may not be feasible without a recession. The economist highlighted the higher likelihood of a recession compared to achieving a 4% inflation rate, underscoring the complexity of the current economic landscape.