With the labour market data more consistent with an economic slowdown rather than a collapse, we think the Fed will begin its rate cutting cycle with a measured 25bp reduction at next week’s FOMC policy meeting. The updated Summary of Economic Projections will provide insight into the cumulative loosening to expect over the next 18 months. While financial markets are now pricing in close to 250bp of rate cuts, our forecast for a soft landing is consistent with a more modest 200bp reduction.
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