BofA: June CPI Underlines "Inflation Tax" Recession

Following the June inflation report, BofA continues to see a 75bp Fed hike in July, followed up by 50bp in September. Their overall view is that the "inflation tax" as underlined by July's high CPI numbers will hurt consumer spending and result in a mild US recession.

• "While the decline in energy prices in the last few weeks points to near-term relief on headline inflation in the coming months, we think the main takeaway from this report is much-stronger-than expected underlying price pressures in both core goods and core services. Our outlook for core goods includes mild deflation over the coming year, but there is little in this report to suggest it is coming anytime soon. In addition, core services inflation is likely to remain sticky given the continued strength in the labor market."