The weaker July employment report and another set of mild inflation data mean the Fed remains on track to cut interest rates in September. With the activity data still supportive of our view that the economy is heading for a soft landing, we doubt the Fed will feel pressured to kick off the loosening cycle with a larger 50bp move. We expect a 25bp cut at every meeting until the fed funds target range bottoms out at 3.25% to 3.5% in mid-2025. That should support a pick-up in GDP growth from next year.
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