Nobel Economist Krugman Says Markets Too Confident Inflation Is Over

(Bloomberg) -- Nobel laureate Paul Krugman said hes concerned investors have put inflation risk in the rear-view mirror too soon, and that easing financial conditions could spark it again.

Im a little worried that the markets may be getting ahead of themselves, Krugman said Monday on Bloomberg Televisions Balance of Power with David Westin. The markets are pricing in that inflation is over. That could be a self-denying prophecy.

There are increasing signs that the Federal Reserve is successfully taming the highest price growth in a generation, with inflation falling across a range of indicators in December. The consumer price index rose at the slowest pace since October 2021 and the Feds preferred inflation measure core personal consumption expenditures eased to the slowest annual pace in over a year.