There are three key factors that will dominate the investment landscape over the coming year. The first is the looming recession, the second is inflation, and the third is where interest rates end up. The latter necessarily will be dictated by the second. While there has been much written about the coming recession, what has been less clear is what the Fed is specifically looking for to assess whether it has done enough.

In this Economics Weekly, we highlight the recent messaging from the Fed and Chair Powell in this regard, and how they are trying to pull rate expectations higher and dissuade the market from prematurely pricing in a pivot and thereby easing financial conditions.

For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.

Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.