Why a recession by end-2023 should be the base case
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Peter Hooper, Global Head of Economic Research, and Matthew Luzzetti, Chief US Economist, discuss how the US economy is the furthest away from the Fed’s targets in forty years. This gap, captured by persistently elevated inflation and a historically tight labour market, is likely
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THINK Ahead: The case for rate cuts
The desk is positioning for potential rate cuts to re-enter the conversation sooner than expected. Per the full note from James Smith, the consensus among market participants seemingly discounts the prospect of easing until 2028; however, the desk believes this view underestimates the shifting economic indicators across the US, Europe, and the UK. With inflation remaining elevated at 4% and labor market recovery showing signs of faltering, there could be room for the Federal Reserve to pivot back to an easing policy next year. This contrasts with our internal coverage which suggests a focus on rate stability rather than cuts in the near horizon.