The economy continues to appear impervious to higher interest rates and, although we expect growth to slow over the first half of this year, that slowdown is likely to be modest. But we don’t expect continued economic resilience to prevent inflation from falling, with the PCE measure still on course to be close to the 2% target by mid-year. As a result, we still see a good chance that the Fed will begin cutting rates in May and that rates will then fall a bit more quickly than markets are pricing in.
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