Key highlights:

• While GDP declined in H1 2022 other data point to an economy still growing.
• The labour market remains very tight, and wage growth elevated.
• Against this backdrop, the softer than expected July inflation readings will not stop the Fed lifting rates further.
• Indeed, we have lifted our expectation for where rates will peak in this cycle to 3.50-3.75% (from 3.25-3.50%).
• We still expect that rate rises, as well as spill overs from recession in Europe, will lead to a recession in 2023.

Find out more in NAB’s US update (August 2022)