Inflation and the Economy

Andrew Hollenhorst, Chief US Economist at Citigroup, discusses the potential impact of inflation and the state of the economy. Hollenhorst analyzes inflation data, including subcomponents like PPI and CPI, and suggests that there are signs of upside risk and short-term fluctuations. However, he believes that the overall trajectory of the economy, driven by factors such as tight labor markets and solid growth, will likely keep inflation at elevated levels rather than achieving a soft landing. Moreover, he highlights the importance of considering longer-term trends and the possibility of a higher neutral policy rate in relation to inflation.