US inflation continued to soar in May, with the Core Consumer Price Index (CPI) up 0.7% month over month and 3.8% year over year—its highest annual rate in more than 25 years.

With the US economy accelerating and price pressures rising, investors have started wondering when the Federal Reserve will start to wind down, or taper, its current QE asset purchases—a pillar of accommodative monetary policy since the global financial crisis.

As the US economy continues to reopen, economic growth is accelerating in line with our above-consensus forecasts.

US core inflation likely will be volatile during 2021, as underlying economic forces continue to rebalance from the pandemic.

We expect US core inflation to surge in the months ahead, as comparisons to low price levels of a year ago cause sizable fluctuations. Ultimately, supply should respond to recovering demand, bringing inflation down and facilitating easy Fed policy.

The probability of more fiscal relief from Congress has risen—good news for the US economy and a boost to our growth forecast. While risks remain, and it’s too early to talk about the pandemic in the past tense, we’re optimistic the economy can return to more normal footing soon.

With a greater level of clarity than we’ve had since the COVID-19 pandemic, we’re getting a better sense of how the US economy might shape up over the next few months, into 2022 and beyond. We see three distinct stages over that time frame.

Two recent developments could have big implications for the US economic outlook: general elections and news of very promising progress on a COVID-19 vaccine. To understand the ramifications, we have to distinguish near term from longer term.

US third quarter GDP was better than expected, though our updated economic forecasts still show a quick but incomplete recovery. Over time, this should give way to a more gradual, lengthy path back to “normal.” But there are a lot of moving parts.

With US elections about two months away, investors are intensifying their focus on the presidential and congressional contests. Historically, political transitions haven’t had much impact on the economy and markets, but this time could be different.

The Fed gave its updated economic outlook this week, but not the additional policy support markets were looking for. We think this was a misstep...but one we hope will be corrected if the outlook doesn’t improve.

The Fed gave its updated economic outlook this week, but not the additional policy support markets were looking for. We think this was a misstep...but one we hope will be corrected if the outlook doesn’t improve.

The Fed continues to dismiss the idea of negative US rates but the market keeps pricing them in. We don’t expect negative rates: in our view, the market is using them as a proxy for Fed measures that may be needed but aren’t yet identified.

The onslaught of the coronavirus forced the Federal Reserve and lawmakers to take desperately needed measures. The US economy will eventually recover, but the effects of these drastic policy decisions will be felt for a long time.

The decline in US economic activity from social distancing measures and forced shutdowns is likely to be bigger than our initial guess. While we expect a recovery once the coronavirus crisis eases, we don’t have enough information yet to dimension it.

The historic US fiscal aid package isn’t a quick fix, but it provides welcome relief and will make it easier for the US economy to rebound when the coronavirus crisis eases. More important, it shows that Congress is willing to act swiftly and dynamically.

With markets reeling from concerns over the coronavirus and plummeting oil prices, the US Federal Reserve took another step Monday to shore up markets. The Fed has more in its toolbox, but fiscal policy may also be needed to fill a gap in the US economy.

This week’s Fed rate cut helped steady financial markets reeling from the expected impact of the coronavirus on the US economy, and we think more cuts are coming—in March and beyond. The economy should rebound in the second half of the year, though at a lower full-year pace.

The US and China formally signed a phase-one trade deal Wednesday after several months of negotiations. We see the deal as a near-term positive for markets—but it also leaves the thorniest issues between the two countries unresolved.

The US Fed held rates steady in December and plans to continue that stance through 2020. But a lot can happen to change the Fed’s mind—after all, it entered 2019 expecting to hike rates and ended up with three cuts. What does 2020 have in store?

The Fed has signaled it is unlikely to cut interest rates again in December, but we expect further rate cuts next year. We believe the Fed has not yet done enough to protect the economy against headwinds. While we don’t forecast a US recession, we think additional monetary policy easing will be needed to stabilize growth.

The Fed cut rates again and indicated that one more cut should be enough to shore up growth. We think more will be needed. But will rate cuts work? And if not, what else can the Fed do?

Financial markets are focused on the ongoing trade war between the US and China—which goods and services are in play and what measures are being taken or threatened in each case. But the trade conflict could spill over into currency markets—and that’s a risk that bears watching.

The Fed left its benchmark rate unchanged this week, but also signaled a very high probability of cuts later this year. Historically, rate cuts have been a sign of trouble—typically made in response to slower growth and rising unemployment. But this time around, growth data aren’t showing much weakness. What’s the story?

The trade war has taken a harsher turn, threatening to further dampen economic growth. We expect the Fed to respond with sizable rate cuts, but the timing and amounts are more speculative than normal. Why? Economic data haven’t yet taken a major downward turn, and there’s uncertainty over how the Fed will react.

The trade war has taken a harsher turn, threatening to further dampen economic growth. We expect the Fed to respond with sizable rate cuts, but the timing and amounts are more speculative than normal. Why? Economic data haven’t yet taken a major downward turn, and there’s uncertainty over how the Fed will react.

Modern Monetary Theory (MMT) has moved from the fringe to broader public discussion recently, fueling concern from some investors about growing debt levels. We don’t expect MMT to replace our current economic structure, but its populist-inspired underpinnings will likely have a sizable influence on policy.

US inflation has been running low for some time, and key members of the Federal Reserve Open Market Committee (FOMC) are pointing a finger at the traditional policy framework. So rate hikes are on hold for the time being—and monetary policy is under the microscope.

Last week’s meeting of the Federal Open Market Committee (FOMC) surprised even those who expected a dovish outcome. As the Fed wrangles with its policy framework, one takeaway is clear: don’t expect rate hikes this year—and possibly next.

A generation ago, China had little influence beyond its borders. Today, its importance to the world economy rivals the United States’. China’s role in markets is growing, too: in April, it will join a major global bond index. The future may bring a freely traded Chinese yuan and a challenge to the US dollar.

Countries and companies have been on a borrowing binge even as the growth of the working-age population in many parts of the world slows. Is a prolonged period of low growth and low inflation in our future?

The government shutdown and temporary displacement of some workers didn’t cause the strong US labor market to miss a beat. Today’s jobs report reinforces that gains have been accelerating. That’s good news for the economy and markets.

The US government shutdown is almost four weeks old, and there’s no sign that the standoff will be resolved anytime soon. How much has the shutdown impacted—and how much will it impact—economic growth? That depends on how long it lasts.

As expected, the Fed hiked interest rates yesterday, but we now think there will be fewer hikes in 2019 than we previously called for. Not because the US economy is in trouble, but because the Fed is changing its approach to setting policy.

A rapid rise in US interest rates has put financial markets on the defensive lately. Will the Federal Reserve respond by slowing the pace of its tightening campaign? Don’t bet on it.

What might the US midterm election results mean for fiscal policy and financial markets? Probably not much if Democrats and Republicans end up splitting control of Congress. But a sweep by either party could lead to very different outcomes.

The revised NAFTA deal relieves uncertainty for Canada and avoids a possible Mexican barrier to ratification. But what does it really mean for the three countries involved—or for trade tension with China?

When it comes to the official US short-term interest rate, the Federal Reserve now appears to be on autopilot, with three more quarter-percentage-point increases likely by mid-2019. But after that, things should get more complicated.

Many investors have started to scrutinize the shape of the US Treasury yield curve, worried that a potential yield-curve inversion would mean imminent recession. In our view, things aren’t that simple.

Aluminum. Cars. Solar panels. It’s hard to track the tariffs without a scorecard. As headlines continue to swirl, many investors worry about the impact on the US economy. Clearly, tariffs and trade wars hurt growth, but we don’t think the impact will be big enough to derail the economy just yet.

The US Federal Reserve decided against an official short-term rate hike at this week’s meeting—hardly a surprise. But US Treasury yields continue to climb in 2018, and not all the explanations are good news.

There’s not much suspense around this week’s Fed meeting: the fed funds target rate is almost certain to rise by 25 basis points. We think it’s more important not to overlook this cycle’s endgame.

Market volatility has spiked recently, driven largely by growing concerns about rising inflation and interest rates. We think the volatility is exaggerated, but we’re not surprised inflation is rising—and rates along with it.

The tremors that have battered financial markets recently have been nerve-wracking. But remember, the market is not the economy. Economic growth can persist even when markets decline, and that growth can eventually help to stop the slide.

As 2018 gets rolling, markets don’t have great expectations for Fed interest-rate hikes. Based on futures pricing, roughly two small increases are anticipated this year. We think there will be more.

With the US economy humming and the Fed seemingly pushing all the right buttons, it makes sense to expect more of the same in 2018. That means more rate hikes on the way. The question is: How many?

The US Senate approved a tax bill last weekend, and it now appears highly likely that final tax legislation will be passed in the next few weeks. Big changes to the tax rules will impact the economy, taxpayers and financial markets.

Comprehensive, revenue-neutral tax reform could give the US economy a boost. But tax cuts alone are more likely to lead to higher budget deficits than to increased growth.

Jerome Powell, President Trump’s pick to lead the Federal Reserve, is likely to continue the central bank’s gradual retreat from unconventional policy. But the test for a Powell-led Fed will come when the economic cycle turns.

US economic activity is picking up, and as a result, we’ve raised our growth forecasts for 2017 and 2018. What’s behind the good news—and how will it impact interest rates?