Our US Chart Pack has been updated with the latest data and our analysis of recent developments.
We still think the economy is more likely than not to fall into a mild recession later this year, as higher interest rates remain a drag and credit conditions continue to tighten. With the labour market proving resilient and core inflation still much too high, we expect the Fed to hike rates by a final 25bp at the late-July FOMC meeting, taking the fed funds target to a peak of 5.25%-5.50%, and don’t expect rates to be cut again until next year. But as the economy weakens and the downward trend in core inflation gathers pace, we think rates will eventually fall back more quickly than markets are now pricing in.
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