The latest FOMC meeting suggests the Fed already has its eye on President-elect Donald Trump’s inflationary policy changes. We have therefore revised up our forecast for the terminal fed funds target range, to between 3.75% and 4.00%, with one 25bp cut in March and a final one in June. With the economy continuing to perform well and the labour market normalising rather than collapsing, there are still some upside risks to that forecast, particularly if Trump were to impose tariffs sooner than we assume.
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