Inflationary Trump Will Put the Fed in The Hot Seat

The Week Ahead

November 14, 2016

Donald Trump is inflationary. Most elements of his economic policy have the potential to ignite inflation well above what is currently priced in. And soon enough, the President-elect might have to deal with a Fed that needs to accelerate the pace of its monetary tightening and thus, compromise his march towards the promised land of 4% GDP growth.

The combination of lower taxes and increased spending can have a notable impact on the economic growth and inflation in late 2017 and further into 2018. While we have not yet changed our GDP growth forecast, the likelihood is that if we do, it would probably be to raise it.

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