bullish
Resilient Activity Raises Forward Rates
Phil has highlighted this Insight as a Top Pick
408 Views11 Aug 2023 15:21
SUMMARY
- Activity data have kept skewing towards surprising resilience. Price and wage inflation drive current policy decisions, but activity is critical to the outlook.
- The resilience of GDP growing near its potential pace means the current effective policy setting doesn’t look that tight. Neutral rates may be near pre-GFC norms.
- Policymakers can wait for evidence that cyclical excesses have gone before turning to relatively small and late cuts. Policy hysteresis only compounds this pressure.
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