Bloomberg Talks JPMorgan's David Kelly Talks Inflation, CPI Report
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Oct 24, 2025 
David Kelly, Chief Global Strategist at JPMorgan Asset Management, offers keen insights into the September CPI report and its implications for the Federal Reserve. He discusses how better-than-expected inflation data could lead to rate cuts, delving into the impact of falling rental and used car prices. Kelly also addresses potential concerns over asset bubbles resulting from Fed policies and warns about broader financial stability. His analysis sheds light on the fine balance between managing inflation and supporting market liquidity.
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K-Shaped Inflation And Muted Core Goods
- David Kelly says the CPI report shows a K-shaped inflation dynamic with rental costs and used car prices falling.
- He notes core goods inflation is muted because mainstream retailers aren't passing on tariff-driven price increases yet.
Tariff Inflation May Be Delayed
- Kelly warns tariff-driven price increases may arrive later when consumers get larger tax refunds next year.
- He expects a temporary spurt of tariff inflation followed by cooling as momentum fades.
Caution: Don't Cut Below Neutral
- Kelly advises the Fed to be cautious about cutting rates too far because lower rates mainly fuel financial markets not growth.
- He warns against cutting below neutral when the economy isn't facing recession risk to avoid inflating asset bubbles.