But with news that inflation is showing signs of going down, we can expect inflation to drop below 2% soon and the Fed to lower interest rates soon. In particular, people are more optimistic and believe that the Fed will lower interest rates twice this year as inflation is gradually being controlled.
Inflation has only shown signs of being "sticky" not signs of going down.
For it to go down the chaos in the world has to calm down, energy prices have to come down, the supply chain disruptions have to stop, etc. then we can start seeing inflation start coming down and then we can see them lower the rates. None of it is happening yet though.
I agree with what you said, real inflation has not improved too much and is still high. But CPI in April was at 3.4% and lower than before. Looking at that, we cannot be said that inflation has not shown signs of decreasing, it has decreased but quite slowly.
In addition, I think if we wait until the world situation calms down, energy prices decrease, supply and demand are not interrupted... then make the decision to reduce interest rates, I think interest rate cuts will never be possible. Because interest rates are being maintained at too high a level today, it is also said to be one of the many reasons making it more difficult for the economy to recover. Maintaining interest rates at high levels is no different from a double-edged sword, it can curb rising inflation but will also make the economy more stagnant, even falling into recession.
So I think that's why the Fed still needs to cut rates first and there will be at least one or two rate cuts this year.
But if the Federal Reserved does cut rates, won't that cause reinflation, then therefore Jerome Powell would need to increase rates higher than 5.5%? That would be worse than the economy and make the "soft landing" less probable, which already IS improbable in my opinion.