- Tariffs have increased prices but are not expected to lead to persistent inflation
- Inflation progress has stalled but should be on track to 2% in 2027
- Fed can still cut rates in the near term given current policy is moderately restrictive
- Economic growth has slowed and the labor market has gradually cooled
- Labour market now comparable to pre-pandemic years when it was not overheated
- Imperative that Fed meets its inflation target, but without undue risk to maximum employment goal
- Clear communication can limit market disruption
- Don't like the notion of a short-run neutral rate
- Fiscal policy changes enacted this year will boost growth next year, immigration policies may offset that
- Expect roughly trend growth this year and the next
- Markets seem to be very bullish on AI, anticipating a period of strong growth
We are seeing some bids in US equities as Fed's Williams leans toward a cut in December. The "clear communication can limit market disruption" comment sounds like a "clear" signal that a December cut is going to happen.
