Inflation is no longer the main concern for the Federal Reserve. The Fed clearly takes a wide range of factors into account when setting monetary policy in May with inflation being clearly less important in relative terms than just 2-3 months ago. Maybe the reason is that they actually know that inflation is coming down now? 

The pundits talking about structurally higher inflation, “the big flippening” and similar topics will likely be silenced in coming quarters as every reasonable inflation indicator points to a sharp deceleration in price pressures. Inflation may very well be structurally higher than before Covid (it is a feasible viewpoint), but remember the cycles around the trends!

The question is now whether the evidence will be tangible enough by the May meeting to convince the Fed that the hiking cycle is over. Our best guess is yes.

Here are 10 reasons/charts why the inflation episode is over within 6 months from now and as per usual we prefer charts to text.

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Chart 1: Fed priced to deliver cuts with high probability in May and June