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Peak hawkishness to continue for a little longer

The continued strength of core inflation points to another 75bp rate hike at next week’s Fed meeting and rates may now rise slightly higher than we previously thought. But the FOMC’s new projections are still likely to signal that the end of the tightening cycle is coming into view, and we still expect a sharp fall in inflation to eventually persuade officials to start cutting rates in the second half of next year.

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