In response to Donald Trump’s election win and the likelihood that his policies will be inflationary, we have revised up our forecast for the terminal fed funds target range in 2025 by 50bp, to between 3.50% and 3.75%. There are, if anything, still some upside risks to that view, with recent price data suggesting that inflationary pressures are picking up again even before tariffs and immigration curbs are introduced. We expect GDP growth to average close to 2% over the next few quarters, although we are concerned that Trump’s policies will weigh on growth further ahead.
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