If there’s one takeaway from this meeting, it’s that the Committee wants to position themselves much more cautiously on the inflation outlook, but the Fed is just a couple of bad labor market prints from having to put more cuts back on the table.
Our baseline projection is for the median rate dot at three 25 bp cuts in 2025. Our hawkish scenario puts the median member at two cuts for 2025.
Now that rate normalization is about to move into the next, slower phase, it is important that they do not predetermine the scale of normalization.
A lot of Fedspeak this week, enough to firm up our view that there will be a cut in December, with a January pause.
A light week of Fedspeak with Thanksgiving. Also released last week were the minutes from November's FOMC meeting. It's clear that neutral rate uncertainty is going to play a large role in this cutting cycle.
