We expect GDP growth to average 2.2% and 2.3% this year and next, driven by strong AI-investment and a rebound in consumption growth. The labour market appears to be stabilising, and we expect the unemployment rate to fall further as employment growth picks up while restrictive immigration policies hold back labour supply. The recent rebound in oil prices presents upside risks to our forecast for energy inflation to fall. But regardless, our view that core PCE inflation will remain above 3% this year should prompt the Fed to hike interest rates by a total of 75bps in the coming year.