Fed governor says he sees inflation coming down ‘DRAMATICALLY' in 2026

Economic Outlook - The recent jobs numbers indicate a strong economy with an unemployment rate of 4.3%, suggesting that interest rates may not need to be lowered immediately [1][24] - Economic growth is a key factor in monetary policy, and while current growth is solid, inflation is expected to decrease significantly this year due to various factors [2][3] Inflation Dynamics - Factors contributing to a decrease in inflation include changes in how shelter inflation is measured and policies that enhance supply-side economics, which are disinflationary [4][6] - Deregulation efforts are projected to reduce inflation by approximately 0.5 percentage points annually in the coming years, as they allow the economy to produce more efficiently [5][6] Supply-Side Economics - Increasing the supply side of the economy can lead to lower prices, as producing more goods and services typically drives prices down [12][19] - The current economic model used by the Federal Reserve does not adequately account for the relationship between supply-side improvements and inflation reduction [10][11] Employment and Construction - The construction sector has shown significant growth, adding 33,000 jobs, which is indicative of increased factory building and production capacity [8][19] - More factories and increased production are expected to lead to a decrease in prices for goods, contributing to lower inflation rates [9][19] Regulatory Impact - The importance of regulations on the supply side of the economy is often underestimated, yet they play a crucial role in determining productivity and industrial mix [18] - Overregulation can push industries overseas, negatively impacting the domestic economy's productivity profile [18]