Cathie Wood Says Inflation Could Hit Zero by 2026
- Cathie Wood expects 2026 to deliver rare economic balance, with inflation potentially falling to zero as shocks fade.
- Declining oil prices and easing housing rents could drive fast disinflation, possibly pushing inflation below zero.
- Markets absorbed policy shocks this year, suggesting investors may already price in part of a stronger, low-inflation 2026.
Cathie Wood, ARK Invest’s chief executive, said 2026 may deliver rare economic balance, with inflation possibly reaching zero. She shared the outlook during recent public remarks this year, addressing U.S. macro conditions. Wood explained that easing price pressures, steady growth, and fading shocks could reshape expectations faster than markets assume.
Markets Absorb a Turbulent Year
Wood said markets have already processed several disruptions during the current year. Notably, she cited tariff uncertainty, government shutdown risks, and persistent hawkish Federal Reserve messaging. However, asset prices remained steadier than many expected through those episodes.
According to Wood, this resilience matters for understanding what comes next. She said price action suggests investors may already discount part of next year’s outlook. Moreover, she noted that policy uncertainty failed to derail broader market stability. That backdrop, she argued, frames why 2026 now draws increased attention.
Inflation Outlook Centers on Oil and Housing
Turning to inflation, Wood said price pressures could fall sharply if current trends persist. She pointed specifically to declining oil prices and easing rent costs. Together, she said, those forces could push inflation toward zero.
However, Wood stressed that tariffs still influence prices today. Even so, she said disinflation could accelerate once those effects fade. Importantly, she added inflation could drop below zero if energy and housing costs continue falling. This view, she said, contrasts with prevailing market assumptions.
Growth Expectations and Policy Context
Wood linked her inflation view to expectations for stronger growth. She said growth could improve as macro conditions stabilize. Meanwhile, she referenced the Federal Reserve’s hawkish tone following leadership changes, including the influence of Trump appointee Miran.
According to Wood, those policy signals shaped market psychology this year. Still, she said investors now appear more open to a different 2026 scenario. She described it as a period where growth strengthens while inflation retreats. Wood said markets may already reflect part of that shift, though not fully.