Tom Lee Says Inflation Could Fall Sharply Over the Next 6 Months

Tom Lee says inflation could fall sharply over the next six months, potentially giving the Fed room to soften its current hawkish stance.
“I think the probability is really high it’s gonna drop,” Lee said.
His main focus is housing, which remains one of the most important components of U.S. inflation.
Lee argues that for inflation to meaningfully reaccelerate from here, housing prices would likely need to rise significantly.
Higher interest rates, however, continue to pressure housing affordability and financing conditions, which could help contain that source of inflation.
If shelter inflation cools materially, it could pull headline and core inflation lower even without a major deterioration in the broader economy.
Lee’s thesis is that softer inflation over the coming months could eventually give the Fed more flexibility on rates.