with Michael Pearce and Nancy Vanden Houten
October 31, 2023
The economy has remained resilient through the end of the third quarter, but we expect a combination of high interest rates, tighter lending conditions and more restrictive fiscal policy will push the economy into a sharp slowdown over the coming quarters. A prolonged period of below-trend growth will help to lower inflation back closer to the Fed’s 2% target. But with the Fed approaching its inflation target from above, officials are likely to take an extremely cautious approach to lowering interest rates next year and beyond.