In June 2022, U.S. inflation rates reached 40-year highs. During the following two years, ‘immaculate disinflation’ saw both the Consumer Price Index and Personal Consumption Expenditures-based inflation rates fall sharply, even as economic growth remained robust and labor market stayed healthy. However, worryingly, core inflation rates have recently stopped falling, either moving sideways or ticking up.

An intriguing debate has emerged in both economic and financial market circles regarding the potential inflationary impact of the Trump policy agenda. Questions are also swirling around the Fed’s ability to maintain its independence under the new political regime.

Having experienced a decade of abnormally low inflation rates prior to the pandemic, the American public was jolted by the massive spike in general price levels observed during the 2021 to 2022 inflation shock. The adverse effect on consumer psyche appears to have persisted well into disinflationary cycle and likely played a key part in determining the 2024 election outcome.

Overall price levels remain elevated and public expectations are yet to fully adjust and get acclimatized to the new levels. General price levels are unlikely to revisit their pre-pandemic levels. In fact, the public should probably not wish for such an outcome since that would require a period of

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