Richard Mills Sees Fed Cutting Rates by Late 2026 as Trimmed-Mean PCE Holds at 2.35%
Updated
Updated · Investorideas.com newswire · Jun 25
Richard Mills Sees Fed Cutting Rates by Late 2026 as Trimmed-Mean PCE Holds at 2.35%
3 articles · Updated · Investorideas.com newswire · Jun 25
Summary
Late 2026 is when Richard Mills expects the Federal Reserve to begin cutting rates, arguing Kevin Warsh is more likely to look through war-driven price spikes than respond with further tightening.
Trimmed-mean inflation is central to that view: annual Trimmed-Mean PCE stood at 2.35% while Trimmed-Mean CPI rose to 2.9% in May, suggesting underlying price pressure is cooler than headline measures imply.
Warsh's framework treats inflation as mainly a monetary phenomenon, distinguishing temporary oil and shipping shocks tied to the Iran conflict and Strait of Hormuz from sustained, economy-wide inflation.
Markets still price U.S. rates about 50 basis points higher a year from now, but Mills says restrictive housing conditions, softer wage pressure and fading energy distortions make cuts more plausible than hikes.
The call ultimately hinges on geopolitics: if the Iran-US ceasefire holds and Hormuz stays open, lower oil and commodity costs could strengthen the case for easing into late 2026 or 2027.