The ongoing strength in AI investment should help to offset the hit to real incomes from the renewed rise in fuel prices, resulting in above-consensus GDP growth of 2.5% next year. That will lead to tighter labour market conditions and keep core inflation above 2% throughout 2027, prompting another two 25bp interest rate hikes from the Fed. Given our assumption of a major stock market correction by late next year, we have pencilled in slower GDP growth and a reversal of those hikes in 2028.