Quarterly Economic & Market Observations

Presented by

Vincent Reinhart, Chief Economist & Macro Strategist

About this talk

Two once-in-a-century shocks—a global pandemic and a large-scale land war in Europe—have confronted this generation of economic policymakers. The next quarterly installment of Economic and Market Observations will discuss how they’ve fared thus far in this test. The Federal Reserve (Fed) is attempting to pull inflation back to goal from historic heights through aggressively raising interest rates. We think Fed officials will fall short of the objective because they are: • Counting on outsized improvements in aggregate supply • Underestimating the momentum of inflation as wages catch up to prior declines in real values and inflation expectations escalate • Underappreciating that their resolve to fight inflation may flag over time Central bankers currently coping with high inflation in most other economies will similarly be found wanting as the world slides into recession. This presentation will consider the early evidence of economic downturn and its asset-price implications.

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