ARK Invest CEO Cathie Wood said Wednesday inflation could fall to between 0% and 1% over the next few years, even as the U.S. economy gains momentum, saying she expects Federal Reserve Chair Kevin Warsh to avoid tightening policy if price pressures ease.

Following a roadshow across Asia and Europe, Wood said in a series of posts on X, that investors remained concerned about inflation despite her view that it could “break down in a big way” on rising productivity and easing unit labor costs.

Wood Points To Productivity, Labor Costs

Wood said first-quarter U.S. productivity rose about 3% from a year earlier, while compensation per hour increased 3.5%, putting underlying inflation at 0.5% based on unit labor costs.

She added that productivity, which played a key role in keeping inflation subdued during the 1980s and 1990s, continues to act as a disinflationary force.

On a roadshow through Asia and Europe, I am struck by investor fears of inflation. They are surprised when I suggest that inflation could break down in a big way, and not just because of oil prices. As measured by unit labor costs, inflation already is down to 0.5% YoY.

— Cathie Wood (@CathieDWood) June 24, 2026

In May, U.S. consumer prices rose 4.2% year over year, up from 3.8% in April and the highest reading since April 2023.

Truflation, Warsh Support Softer Inflation View

Wood added that Truflation, the real-time inflation tracker, has declined to 1.8% year over year from 11% in 2022, while its core measure currently stands at 1.4%.

Wood said she believes Warsh understands the disinflationary impact of productivity and the “flaws in government-measured inflation rates”, adding that he would not stand in the way of economic growth if inflation falls.

“The Fed is shifting from fighting growth to encouraging it,” Wood added.

At his first meeting as Fed chair, Warsh kept interest rates unchanged, declined to participate in the Fed’s “dot plot” and said the central bank would take a less communicative approach to monetary policy.

To conclude that thought, if the US economy continues to pick up momentum—even booms—while inflation slips to 0-1% or below during the next few years, as we believe is likely, Kevin Warsh’s Fed will not stand in the way. The Fed is shifting from fighting growth to encouraging it.

— Cathie Wood (@CathieDWood) June 24, 2026

Wood’s Outlook Contrasts With Wall Street’s Hawkish Fed Calls

Wood’s outlook contrasts with Wall Street forecasts expecting higher interest rates as inflation remains above the Federal Reserve’s 2% target.

Earlier this week, Bank of America adopted one of the Street’s most hawkish forecasts, expecting the Fed to raise interest rates by a cumulative 75 basis points before the end of 2026.

“While others are projecting higher rates sooner than was the case a few months ago, I believe that Warsh will give the financial markets a master class in monetary policy,” Wood added.

The June CPI data is due July 14, ahead of the Fed’s next policy meeting on July 28-29.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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