diff --git a/CHANGELOG.md b/CHANGELOG.md
index a883a72f31..5a6321ab8a 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -46,21 +46,22 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 ## [Unreleased]
 
-### Bug Fixes
-
-- [2148](https://github.com/umee-network/umee/pull/2148) Fix MsgBeginUnbonding counting existing unbondings against max unbond twice.
-- [2148](https://github.com/umee-network/umee/pull/2148) Fix MsgLeverageLiquidate CLI not actually allowing wildcard denoms.
-
 ### Features
 
 - [2129](https://github.com/umee-network/umee/pull/2129) Emergency Group x/ugov proto.
-- [2146](https://github.com/umee-network/umee/pull/2146) Add store GetTimeMs and SetTimeMs.
+- [2146](https://github.com/umee-network/umee/pull/2146) Add store `GetTimeMs` and `SetTimeMs`.
 - [2157](https://github.com/umee-network/umee/pull/2157) Add `x/metoken` module.
+- [2145](https://github.com/umee-network/umee/pull/2145) Add hard market cap for token emission.
 
 ### Improvements
 
 - [2134](https://github.com/umee-network/umee/pull/2134) Bump CometBFT to 34.29.
 
+### Bug Fixes
+
+- [2148](https://github.com/umee-network/umee/pull/2148) Fix MsgBeginUnbonding counting existing unbondings against max unbond twice.
+- [2148](https://github.com/umee-network/umee/pull/2148) Fix MsgLeverageLiquidate CLI not actually allowing wildcard denoms.
+
 ### API Breaking
 
 - [2140](https://github.com/umee-network/umee/pull/2140)
diff --git a/app/app.go b/app/app.go
index 4a99441541..a087dde662 100644
--- a/app/app.go
+++ b/app/app.go
@@ -120,6 +120,7 @@ import (
 	wasmtypes "github.com/CosmWasm/wasmd/x/wasm/types"
 
 	customante "github.com/umee-network/umee/v5/ante"
+	"github.com/umee-network/umee/v5/app/inflation"
 	appparams "github.com/umee-network/umee/v5/app/params"
 	"github.com/umee-network/umee/v5/swagger"
 	"github.com/umee-network/umee/v5/util/genmap"
@@ -672,6 +673,11 @@ func New(
 	// we prefer to be more strict in what arguments the modules expect.
 	skipGenesisInvariants := cast.ToBool(appOpts.Get(crisis.FlagSkipGenesisInvariants))
 
+	inflationClaculator := inflation.Calculator{
+		UgovKeeperB: app.UGovKeeperB,
+		MintKeeper:  &app.MintKeeper,
+	}
+
 	// NOTE: Any module instantiated in the module manager that is later modified
 	// must be passed by reference here.
 	appModules := []module.AppModule{
@@ -694,7 +700,7 @@ func New(
 			app.interfaceRegistry,
 		),
 		gov.NewAppModule(appCodec, app.GovKeeper, app.AccountKeeper, app.BankKeeper),
-		mint.NewAppModule(appCodec, app.MintKeeper, app.AccountKeeper, nil),
+		mint.NewAppModule(appCodec, app.MintKeeper, app.AccountKeeper, inflationClaculator.InflationRate),
 		// need to dereference StakingKeeper because x/distribution uses interface casting :(
 		// TODO: in the next SDK version we can remove the dereference
 		slashing.NewAppModule(appCodec, app.SlashingKeeper, app.AccountKeeper, app.BankKeeper, *app.StakingKeeper),
diff --git a/app/inflation/expected_keepers.go b/app/inflation/expected_keepers.go
new file mode 100644
index 0000000000..4f9d97c84d
--- /dev/null
+++ b/app/inflation/expected_keepers.go
@@ -0,0 +1,10 @@
+package inflation
+
+import (
+	"cosmossdk.io/math"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+)
+
+type MintKeeper interface {
+	StakingTokenSupply(ctx sdk.Context) math.Int
+}
diff --git a/app/inflation/inflatin.go b/app/inflation/inflatin.go
new file mode 100644
index 0000000000..efd8dc50c1
--- /dev/null
+++ b/app/inflation/inflatin.go
@@ -0,0 +1,51 @@
+package inflation
+
+import (
+	"cosmossdk.io/math"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	minttypes "github.com/cosmos/cosmos-sdk/x/mint/types"
+
+	ugovkeeper "github.com/umee-network/umee/v5/x/ugov/keeper"
+)
+
+type Calculator struct {
+	UgovKeeperB ugovkeeper.Builder
+	MintKeeper  MintKeeper
+}
+
+func (c Calculator) InflationRate(
+	ctx sdk.Context, minter minttypes.Minter, p minttypes.Params, bondedRatio sdk.Dec) sdk.Dec {
+
+	maxSupply, _ := sdk.NewIntFromString("21_000_000_000_000_000000")
+
+	totalSupply := c.MintKeeper.StakingTokenSupply(ctx)
+	if totalSupply.GTE(maxSupply) {
+		// supply is already reached the maximum amount, so inflation should be zero
+		return sdk.ZeroDec()
+	}
+
+	// TODO: here we need to use a new inflation function and check if we need to go to the
+	// next inflation cycle
+	minter.Inflation = c.calculateInflation(ctx, minter, p, bondedRatio)
+	return readjustSupply(totalSupply, maxSupply, minter, p)
+}
+
+func (c Calculator) calculateInflation(
+	ctx sdk.Context, minter minttypes.Minter, p minttypes.Params, bondedRatio sdk.Dec) sdk.Dec {
+	return minttypes.DefaultInflationCalculationFn(ctx, minter, p, bondedRatio)
+}
+
+// TODO: add unit tests to this function
+func readjustSupply(totalSupply, maxSupply math.Int, minter minttypes.Minter, params minttypes.Params) sdk.Dec {
+	minter.AnnualProvisions = minter.NextAnnualProvisions(params, totalSupply)
+	newSupply := minter.BlockProvision(params).Amount
+	newTotalSupply := totalSupply.Add(newSupply)
+	if newTotalSupply.GT(maxSupply) {
+		overdraft := newTotalSupply.Sub(maxSupply)
+		maxNewSupply := newSupply.Sub(overdraft)
+		factor := sdk.NewDecFromInt(maxNewSupply).QuoInt(newSupply)
+		minter.Inflation = minter.Inflation.Mul(factor)
+	}
+
+	return minter.Inflation
+}