A more “normal” neutral interest rate?
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Economic Outlook A more “normal” neutral interest rate? 26-04-2024 How many rate cuts will we get over the next two to three years? Forecasts vary more than usual, mainly because of varying estimates of the normal interest rate. We expect fewer rate cuts and a higher normal inter
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Top of the Morning: U.S. macro update & FOMC takeaways
The desk anticipates that the recent Federal Open Market Committee (FOMC) decision to cut interest rates by 25 basis points, as expected, signals a delicate balancing act between a weakening labor market and persistent inflation concerns. Per the full note [source], Paul Hsiao highlighted that the Fed now views policy rates as being near neutral, suggesting that future monetary policy will be cautious but needs to navigate complexities like elevated inflation influenced by tariffs. Given the current macroeconomic landscape and the Fed's tone, traders should be watchful of signs indicating the Fed's direction heading into 2026, particularly when interpreting labor market data against inflation indices.
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