Fed’s more aggressive easing path ignites speculation on timing of rate cuts

Via a note from RBC in response to the FOMC on Wednesday, this is their ‘bottom line’ summary:

  • Alongside the decision to hold rates steady was the revised SEP that showed a more aggressive easing path in the years ahead with the timing of interest rate cuts now a topic of discussion.
  • The unusually wide dispersion in expected median Fed Funds in 2024 however again highlighted the level of uncertainty associated with the outlook for both the economy and the inflation in the year head.
  • Persistently lower CPI readings in the U.S. are helping calm the Fed’s concerns that still-resilient economic backdrop will cause another flareup in future inflation.
  • We expect the Fed to be content with where interest rates are currently at, before a gradually deteriorating backdrop prompts them to pivot to rate cuts sometime around the middle of next year.

More on the FOMC here:

This article was written by Eamonn Sheridan at www.forexlive.com. Source