Week of May 8, 2023
Monetary policy and fiscal policy should work in tandem, with actions to spur economic growth when conditions are recessionary and inflation pressures are moderate, and doing the opposite when the economy is overheating. The upcoming budget negotiations between Speaker of the House McCarthy and President Biden should proceed with these factors as a backdrop. A negotiated settlement will be reached to raise the debt ceiling in concert with a moderation in fiscal stimulus. In concert with a more restrictive Fed, an abatement of inflationary pressures, without harmful effects on employment, is likely. Our signals remain unchanged.
Bob Bilkie, CFA
