Economist predicts 'deflation is coming,' which will cause the Fed to 'scramble'

foxbusiness.com:

TrendMacro CIO Donald Luskin shares his economic outlook on ‘Mornings with Maria.’

Ahead of the December meeting, one economist argued the Federal Reserve's «dangerously high» interest rate hikes are transitory, and that the Fed will make cuts in the first quarter of next year.

On «Mornings with Maria,» Monday, TrendMacro CIO Donald Luskin explained his frustration with the Fed's rate hike campaign and his economic outlook. 

«Please, please, please, can we all stop listening to Jay Powell? Please. Mr. Inflation is transitory. He is still so embarrassed about that one. He's now insisting that his dangerously high-interest rates are not transitory. Oh, they will be,» Luskin said. «Inflation is collapsing and he knows it. It's turning into deflation like I warned last time we talked. There will be rate cuts in Q1.»

IS THE FEDERAL RESERVE DONE RAISING INTEREST RATES?

The Fed has raised interest rates sharply over the past year, approving 11 rate increases in the hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.

The Fed voted during meetings in both September and November to hold interest rates steady at a range of 5.25% to 5.5%, the highest level in 22 years. 

FILE — In this Sept. 30, 2021, file photo, Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on Capitol Hill in Washington. Powell says the tangled supply chains and shortages that have bedeviled the (Sarah Silbiger/Pool Photo via AP, File / Associated Press)

Luskin argued the economy has already felt the effects of the rate hike campaign and claimed signs point to coming deflation.

«We