Thoughtful Money with Adam Taggart · Thursday, July 2, 2026
Darius Dale discusses the upcoming debate on 'sticky inflation' and suggests the Fed might use its balance sheet to tighten monetary policy over the next one to two quarters. He believes rate hikes might be less effective due to excess demand concentrated at the 'tail of the K'.
“The next trade, at least something that the markets going to have to debate is, where do we settle out from a sticky inflation perspective? Because if the rate of disinflation is not acceptable, uh, to the policymakers on the FOMC, which are obviously moving in an hawkish direction based on the latest dot plot and summary of economic projections.”
“And in our opinion, we don't think the policy rate is the appropriate tool. Uh, and obviously will kind of unpack any of this with charts, but let me just wrap up on this. Uh, we think there's still material risk of the Fed's, uh, tightening monetary policy over the next one to two quarters. Uh, we think that more, if they do that, if they elect to do that, then they're more likely to use the balance sheet, uh, to tame monetary policy because a lot of the excess demand that we've seen in the U.S. economy is coming from the tail of the K.”