The inflation cooling-off period is actually a return to rationality

Core CPI hitting a four-year low may seem like inflation surrendering, but it’s more like the market returning from euphoria to rationality. Prices soared in recent years, and people got used to “everything being expensive.” Now that prices are rising more slowly, it feels unfamiliar.
Inflation is essentially a tug-of-war between money and goods. When there’s too much money and too little supply, prices naturally rise; now that supply has recovered and demand has cooled, the balance is shifting back, which is actually the economy self-correcting.
Many worry that low inflation will drag down growth, but moderate low inflation can actually stabilize expectations. Businesses find it easier to plan costs, and consumers are more willing to commit to long-term spending. The real danger is losing control, not cooling down.
Historically, most economic problems aren’t caused by high or low inflation, but by excessive volatility. Stability is more valuable than stimulation.
The market now feels like coming down from a roller coaster—legs still trembling, but the ground is actually quite steady. The decline in core CPI is, to some extent, a system “reboot and recalibration.”
So rather than guessing policy shifts, it’s better to focus on fundamental changes. Prices ultimately revolve around value.
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