Their ev underestimates deflation impulses.
Preston Caldwell 23, Master of Business Administration from Rice, bachelors in economics from Arkansas, 6/28/2023, “When Will the Fed Start Cutting Interest Rates?,” https://www.morningstar.com/markets/when-will-fed-start-cutting-interest-rates, oj
Resolution of Supply Constraints Plus Fed Tightening Will Crush Inflation
We expect inflation to fall to normal levels after peaking at 6.2% in 2022. We still think most of the sources of high inflation since the start of the pandemic will abate (and even unwind in impact) over the next few years. This includes energy, autos, and other durables. Aggressive capacity expansion across many areas could turn widespread shortages into gluts within a few years. Combining these factors with monetary policy tightening, we expect inflation to drop to 3.6% for full-year 2023 and average just 1.8% over 2024-27.
We’re more optimistic on inflation coming down than consensus. We think consensus underrates the deflationary impulse likely to be provided by industries like energy and durable goods in coming years, as pandemic-era disruptions fade.