- Big worry is that high inflation gets embedded in public expectations
- Fed has acted 'forcefully and effectively' against high inflation
- Fed has not gotten rates to where they need to be
- Fed will need restrictive rates for some time
- Possible that Fed cuts rates in 2024, 2025 to reflect lower inflation
- There is a risk inflation stays higher than expected
- Outlook for year-end Fed funds rate of 5.00-5.50% looks reasonable
July Fed pricing is up to 5.28% from 5.19% before CPI so we're increasingly into the 5.25-5.50% range being priced in. He validated that without pushing it higher.