Inflation soft landing now is dependent on Federal Reserve action

[Lawrence, 7-9-2024, Seeking Alpha, “It is Time for Powell to Lead,” https://seekingalpha.com/article/4703133-it-is-time-for-powell-to-lead, accessed 7-14-2024, CM]

What is required to see that happen is impeccable execution by Chairman Powell and the Federal Reserve in adjusting monetary policy. They should have the information they need over the coming month to affirm that the rate of inflation will fall to target by year end, allowing them to begin their rate-cut cycle no later than September. In the New York Fed's latest survey, consumers' inflation expectations for the coming year fell for a second month in a row to 3%, which is consistent with pre-pandemic levels.

More importantly in this survey, the percentage of consumers who expect to move has risen sharply since the beginning of the year from 13.6% to 18.2%, which is also back to pre-pandemic levels. This is another development that the Fed has been waiting to see, as it should result in an increase in homes for sale, which will further reduce shelter inflation over the coming year.

All the pieces for a soft landing are falling into place, but the Fed needs to begin easing its restrictive policy before the economy runs at stall speed. I doubt Chairman Powell will give us too many clues today as to what the central bank will do at its next meeting, but he should acknowledge these positive developments, which may instigate some of the rotation I am talking about. The average stock has been consolidating for the past three months, and its performance should be a good leading indicator as to whether the economy lands softly by the end of this year or not.