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US Economics

Disinflationary forces still building

The Fed’s determination to tackle surging inflation will drive the economy into a mild recession by early next year. That will only add to the disinflationary pressure already evident in rapidly easing shortages and push core CPI inflation down to 2.5% by the end of 2023. The Fed will persist with rate hikes, albeit at a slower pace, in the near-term. But as that evidence of falling inflation begins to materialise in early 2023, we expect the Fed to move to the side-lines and then by late 2023 begin cutting rates again, with the fed funds target range falling back to 2.75%-3.00% by end-2024.

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