Ben and Dominique explore the growing “risk management” divide within the FOMC, contrasting hawks who fear a high-inflation regime with doves who believe policy is restrictive enough to wait for more data. They analyse the impact of AI on inflation—with Dominique arguing it acts as a cost-side supply shock rather than a demand driver—and suggest that rising real incomes are finally providing a sustainable foundation for US consumption. As focus shifts to upcoming labour market churn and the critique of “Wash’s” lack of a macro framework in recent communications, the discussion highlights the challenges of the Fed’s “no forward guidance” strategy. Dominique aligns herself with the Fed’s dovish wing, maintaining that low wage bargaining power relative to productivity will support continued disinflation, though she acknowledges “insurance hikes” remain possible if progress stalls.
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