This snippet from Deutsche Bank on the US and the Federal Reserve outlook. Analysts at the bank looked at how long it takes inflation to drop back after it goes above 8%
- it’s generally stickier for the next several years
However, it'll drop more quickly if there is a recession.
- Clearly in this cycle headline US CPI has declined from its peak in June and may continue to do so due to energy rolling over but maybe core will only see serious declines once a recession hits
- DB economists say that only in their base case of a recession and US unemployment hitting 5.5-6% next year will inflation get close to the Fed's objective by end-2024.
- The implications are that Fed Funds will probably need to go to at least 5% to achieve this.
Fed Funds are still a long way from 5%:
