ARK Invest CEO Cathie Wood is not convinced that the inflation pressures are as high as the market is expecting. Her remarks follow a rising interest in investors pricing in the prospect of another Fed rate increase. Wood also said there is a possibility that Fed Chair Kevin Warsh could turn monetary policy more accommodative in the future when inflation starts to ease.
Cathie Wood Explains The Inflation Dynamics
Wood said investor worries about inflation were the main topic of conversation in recent meetings overseas. “On a roadshow through Asia and Europe, I am struck by investor fears of inflation,” she wrote. The ARK Invest CEO added that many investors were surprised by her view that “inflation could break down in a big way, and not just because of oil prices.”
Her words follow a surge in headline CPI inflation to 4.2% in May as traders adjust to the Fed’s new stance. The movement tipped market hopes for a rate increase in September to 25 basis points higher, as Warsh has reiterated central bank’s resolve to hit the 2% inflation target.
Cathie Wood, however, said there’s no need to worry about underlying inflation because it’s near extinction.
“As measured by unit labor costs, inflation already is down to 0.5% YoY,” she said. Productivity in the United States rose about 3% from a year earlier, and compensation per hour rose 3.5%, during the first quarter, according to Wood as she cited a series of economic data. She added, “Thus, ‘underlying inflation’ was 0.5%. No cost-push inflation there!”
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
The ARK Invest founder also noted other inflation metrics that contradict the government’s data. “Truflation, a metric that measures the prices of thousands of consumer goods and services in real time 24/7, has dropped from 11% on a year-over-year basis in 2022 to 1.8%, while core Truflation has dropped to 1.4%,” she stated.
What Will Kevin Warsh’s Fed Decide Next?
Cathie Wood also pointed out that Warsh knows the difference between official inflation statistics and what’s happening in the economy outright. She declared, “I believe that Kevin Warsh understands not only the disinflationary role that productivity is playing but also the flaws in government-measured inflation rates.”
In the future, Cathie Wood anticipates that the Fed will focus on economic growth if inflation ease. “If the US economy continues to pick up momentum—even booms—while inflation slips to 0-1% or below,” she wrote, “Warsh’s Fed will not stand in the way.”
She concluded by saying, “The Fed is shifting from fighting growth to encouraging it.”
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