Excess savings have supported households in 2020, and rising wages will boost them next year.
The Fed is likely to miss a sudden rise in inflation when it happens.
The Federal Reserve anticipates holding policy rates steady as the economy enjoys smooth sailing.
Research using a global model for interest rates shows that U.S. monetary policy is too tight.
If a recession is avoided, then it’s possible the central bank will make a swift pivot from dovish to hawkish.
Central bankers won’t wait this time until the economy is already in a recession to ease monetary policy.
Despite its caution, the Fed might not be positioned to act ahead of a recession.
Inflation is too contained to think the Fed will blindly raise rates and hobble the economy.
With GDP growth hitting 4.1 percent in the second quarter, the Fed may be more likely to raise rates two more times this year.
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