Refocusing on the Inflation Fight
Review the discussion (~45 min) between David Eichhorn and Stephen Douglass on the ongoing challenge to ward off inflation as well as the U.S. debt limit and banking turmoil in Q2 2023. The following events are highlighted:
- The resolution of the debt limit and the easing of banking stress have removed near-term downside risks and shifted market participants’ focus back to the inflation fight.
- Disinflation and robust labor demand in recent months have fostered continued hope for a possible soft landing and confounded expectations for a recession.
- Attention among both market participants and Federal Reserve officials has refocused on the fundamentals of the economy.
- The Fed has projected a new cycle high for the terminal policy rate and rates markets have embraced a higher-for-longer path of policy.