We see recent strength in AI-related business investment as the start of a multi-year capex boom, driving GDP growth of 3.0% this year and 2.5% in 2027. Despite the economy running hot and labour market remaining tight, we expect downward progress in core inflation to resume from the second half of this year, as shelter inflation moderates further and robust productivity growth constrains unit labour costs. The relatively sanguine inflation outlook justifies the Fed under new leadership cutting interest rates by 25bp in June to between 3.25–3.50%, but we think that will then mark a floor in the policy rate, as downside labour market risks never materialise.