Economic growth and inflation will likely peak in 2021 and then moderate in 2022 as fiscal and monetary policy support recede.

Buoyed by faster growth and higher inflation expectations, the Fed advances rate hikes to 2023 and broaches the topic of tapering.

We believe the U.S. is undergoing a large price-level adjustment, not shifting to a persistently higher inflation regime.

To sustainably reach its inflation target, the Fed must raise inflation expectations – and that likely will require a period of above-target inflation.

Amid a brightening economic outlook, the Bank of Canada could begin tapering its bond purchase program this month, though we think it’s a close call and believe a cautious approach is warranted.

The expiration of the temporary SLR changes should enhance the soundness of the banking system, but likely at the cost of Treasury market liquidity.

The Federal Reserve’s communications following its March meeting should help anchor inflation expectations.

The COVID-19 relief bill has spurred talk of inflation, but financial stability may be a more relevant risk.

A large fiscal package geared toward pandemic relief will likely boost U.S. growth even further in 2021, but long-term inflationary risks are still balanced.

With a narrowly Democratic Congress, U.S. fiscal spending is likely to increase on economic relief from the pandemic, infrastructure, and healthcare, boosting the economic rebound.

Rising prices in July have led PIMCO to raise its core inflation forecast for 2020, but not 2021.

The Federal Reserve wants financial conditions to remain accommodative as it looks to support the U.S. recovery.

European measures applied to mitigate the effects of the pandemic have contained the unemployment rate in Europe more than in the U.S. While recognizing economic risks from the rising number of COVID-19 cases in the U.S., our forecast sees this success ratio reversing before the end of the year.

We expect more stimulus, both monetary and fiscal, will be necessary to support the recovery amid the renewed COVID-19 outbreak.

We expect the Federal Reserve will continue to conduct asset purchases at its current pace through year-end, and eventually commit to keeping interest rates on hold through 2022. This should help ensure easy financial conditions and support the economic recovery.