The Fed will leave interest rates unchanged at its upcoming policy meeting. Chair Jerome Powell may acknowledge in his post-meeting press conference that downside risks to the outlook are fading. But the overall tone is still likely to be dovish, not least because officials are increasingly concerned about the recent drop back in core inflation and inflation expectations. We expect a slowdown in economic growth to below its 2% potential pace will force the Fed to begin cutting rates before the end of the year.
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