Larry Kudlow: Jay Powell is a Lame Duck Amidst Falling Inflation and Stock Booms

Falling Inflation and Economic Indicators

• 💡 The Consumer Price Index (CPI) came in much tamer than expected, proving the "experts" and "tariff inflation crowd" wrong.
• 📈 Over the past 6 months, the CPI has increased only 1.9% annually, with the core rate (excluding food and energy) at 2.4%.
• 📉 There is virtually no goods inflation, which is the most tariff-sensitive part of the index, with goods increasing at an annual rate of less than 1% over the past 3.5 months.

Calls for Federal Reserve Rate Cuts

• 🎯 It is high time for the Federal Reserve, led by Jay Powell, to cut their target rate.
• 💰 Fed Governor Chris Waller suggested 150 basis points lower rates, which is considered about right.
• 🗓️ The Fed should have cut rates in May, June, and July, and could still do so in August, but Powell's stubbornness prevents it.

Jay Powell's Position and Fed Independence

• 🦆 Jay Powell is described as a lame duck due to the changing center of gravity at the Fed with the arrival of Professor Myron.
• ⚠️ If Powell does not endorse major rate cuts, he faces a policy revolt from both Trump and non-Trump appointees.
• 🏛️ Powell has already jeopardized Fed independence with erratic behavior, including missing inflation targets, rapid rate hikes, and engaging in politically correct debanking, DEI, ESG, and climate nonsense.
• 📢 He is now politicizing high rates under Trump, after previously politicizing a rate cut under Kamala Harris.
• 🗣️ Muhammad El-Erian has suggested Powell should resign to preserve Fed independence.

Economic Outlook and Stock Market

• 🚀 Stocks continue to boom and hit new records amidst these economic conditions.
• ⏳ The current situation sets the stage for an easier Fed and an entirely new group taking over, which can't come soon enough.