We believe the lagging effects of Central Bank tightening in the real economy will lead to a further deceleration in growth characterized by a mild US recession, anemic growth in Europe and more resilience in emerging markets.
Evidence from past episodes of high US inflation suggests it will take about two years to bring core inflation down by half from its peak level. We believe that the US Federal Reserve and European Central Bank rates are close to their cyclical peaks and do not expect any cuts for the remainder of 2023.