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Economist Steve Moore thinks inflation’s days as a top-of-mind concern are numbered. During an appearance on Fox Business’s Kudlow show on June 26, the former senior adviser to Donald Trump pointed to one specific metric as his evidence: the five-year break-even inflation rate, which has plummeted from above 3.5% to as low as 1.92%.
That number, derived from the gap between regular Treasury yields and inflation-protected securities, essentially represents what bond investors are betting inflation will average over the next five years.
The number Moore is watching
The five-year break-even rate sat around 2.2% as of late June 2026, with an intraday reading of 1.92% on June 25. For context, that’s well below the Federal Reserve’s traditional 2% target on an expectations basis, and a dramatic decline from the 3.5%-plus levels seen earlier.
Moore’s interpretation is straightforward. The bond market is telling us that inflation is being tamed, and that the Fed won’t need to raise interest rates anytime soon.
He credited incoming Federal Reserve Chair Kevin Warsh with helping to stabilize market expectations through his public communications.
Moore went further, projecting that inflation could fall to between 0% and 1% over the course of 2026. He attributed this optimistic forecast partly to productivity improvements driven by artificial intelligence, which he believes are beginning to meaningfully lower costs across the economy.
The messy reality beneath the headline
The headline Personal Consumption Expenditures (PCE) inflation rate, the Fed’s preferred gauge, registered at 4.07% year-over-year in May 2026.
The culprit behind that elevated reading was energy prices, which surged more than 24% over the same period. Strip out that volatile component, and the picture looks considerably less alarming. Food inflation, for instance, moderated to 2.38% in May 2026, suggesting that the core cost-of-living pressures many consumers feel at the grocery store are easing.
The broader economic backdrop does lend some support to the optimistic case. US GDP growth has been running between 3% and 4.3% in recent quarters.
What this means for crypto and risk assets
If Moore’s thesis plays out, the implications for risk assets could be significant. Lower inflation expectations combined with no anticipated rate hikes from the Fed would keep the cost of borrowing relatively cheap. Bitcoin and other major cryptocurrencies have shown consistent sensitivity to interest rate expectations over the past several years. When markets price in tighter monetary policy, crypto tends to suffer. When they price in stability or easing, crypto tends to rally.
But investors should approach this outlook with healthy skepticism. Moore’s projection of 0% to 1% inflation would be extraordinarily low by modern standards, and the gap between that forecast and the current 4.07% headline PCE reading is vast.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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