One of the microeconomic foundations Here is just as one example over Supply Solves over Supply and to carry it over Dr Terry Weissman was with us with Macquarie earlier and he said High Inflation can solve High inflation Oliver Chen at TD Cowan published Moments ago that he observes Costco Seeing finally food disinflation in America it is high inflation solve High Inflation it could on the supply side But on the demand side what we're seeing Is this lingering imbalance between Labor demand and labor Supply and that Will not be solved by high inflation That becomes the wage price spiral that The Fed so greatly fears where High Inflation leads to even higher inflation So for the FED I don't think simply Standing by the wayside and allowing Natural Markets to clear itself will be A long-term solution do you think it's Realistic that the FED could get to six Percent in a Fed funds rate absolutely That has been our long-standing call for The the terminal rate absolutely okay so At what point do they sort of signal That to markets because that is Significantly above where the market has Retraced to and we have seen a big red Pricing this week what kicks them up to That level well I think they're slowly Making their way but they don't want to Over promise in terms of the terminal
Rate if in fact inflation does so excuse Me does show Market Improvement but Given the fact that the market and the FED consistently underestimates the Sticky nature of inflation what we've Seen is the Fed consistently revise Higher their forecast now 230 basis Points higher than that initial forecast In March of last year
