The latest PCE inflation (below) revered its decline path and caused the stock market to fall heavily.
What will the US do to bring down the sky-high inflation? Well, the Fed may need to hike its rate much higher than expected to cool the prices.
How valid is the projected 6.5% rate as stated by the study?
Let's use the Taylor's rule to verify this validity. The chart is showing that a rate above 6.5% is more appropriate for the current inflation situation. We had also stated previously that the US Fed won't reduce its rate in 2023.
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