The Fed’s less dovish language, against a backdrop of fading downside risks, is why we think the Fed is now done cutting interest rates. We anticipate rates will remain at their current level of 1.50%-1.75% at least through the end of 2021. The Fed will not want to repeat the mistake of hiking rates prematurely, particularly not in a highly-charged election year, even if inflation returns to target more quickly than expected.
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