- Recent economic data is consistent with Fed projections
- Monetary policy is well positioned, is somewhat restrictive
- Inflation data since Sept has been ‘a touch higher’ and economy ‘a touch stronger’ than expected
- Hopes disinflation process will continue but lots of uncertainty
- Next year expects growth to slow to 2%, steady unemployment rate
- It’s all about getting policy well positioned for whatever comes next year
- There is a lot of uncertainty around future fiscal policy
- I expect slowing immigration into the US, we’ll see about fiscal and trade policy
- I’ve incorporated some of that into my forecasts
- My estimate is that neutral is 0.25 pp above pre-pandemic
- I think we’re “pretty restrictive”, notes steady cooling of the labor market over two years
After PCE, the market is now pricing in 45.7 bps in easing in 2025 compared to 48.3 bps before the FOMC.
This article was written by Adam Button at www.forexlive.com. Source