Despite upward revisions to the median projections for both GDP growth and core PCE inflation, the Fed’s median forecast for interest rates still shows a cumulative 75bp of policy loosening this year. In contrast, we continue to believe that below-potential GDP growth will help to drive core inflation much closer to the 2% target by year-end, persuading the Fed to cut rates by 100bp, beginning in June.
We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute online briefing at 11am EDT on Thursday 21st March. (Register here .)
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