For years now, the Federal Reserve has been chasing its 2% inflation target. Ryan Detrick, Chief Market Strategist at Carson Group, thinks it’s time investors stopped expecting it to get there — and started rethinking what higher inflation actually means for their money.
In an exclusive interview with Benzinga, Detrick made the case that the market is misreading the inflation story. Yes, prices are running hotter than the Fed wants. No, that doesn’t have to be bad news for stocks. In fact, he says, it might be the opposite.
The 2% Goal Is Slipping Out Of Reach
The Fed has long targeted 2% as its goal for annual inflation. But getting there has proven stubbornly difficult, and Detrick thinks the market is wrong to keep expecting it.
“What we’ve been saying for awhile, we’re in a 3% inflation world,” Detrick told Benzinga.
He pointed to the Personal Consumption Expenditures (PCE) Price Index, a popular Fed-watched gauge of consumer-price trends. Around 55% of its components are now climbing at more than 3% a year — up from about 45% a year ago.
“People hear that and they think immediately, oh my god , inflation’s higher. It has to be bad. That’s not true,” he said. History, he argued, doesn’t actually back up the idea that 2% inflation is normal: “Inflation has averaged around 4.5% throughout history, not the 2% that the Federal Reserve is targeting.”
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