Fed will not raise rates this year, says EY-Parthenon's Greg Daco

• Fed is expected to hold rates through year-end, as inflation is primarily supply-driven (energy, AI resource strain), not demand-driven.
• Further rate hikes are seen as ineffective against supply-side inflation and potentially harmful to the economy.
• The economy is experiencing an 'income squeeze' and 'gradual erosion in spending power' for many Americans, limiting consumer spending growth, which is likely to continue in the second half of the year.

EY-Parthenon's Greg Daco believes the Fed will hold interest rates through year-end, as current inflation is driven by supply pressures (energy, AI resource strain) rather than high demand. He argues that further rate hikes would not effectively address supply-side inflation and could harm the economy. CNBC's Matt Peterson notes a political shift, with the administration now seemingly aligning with the Fed's decision to hold rates.