Our core view is there will be sufficient progress on inflation towards target in both the US and Euro Area this year for the Fed and ECB to start cutting interest rates. 

We think the conditions for ECB rate cuts will be in place from the European spring. In the US, we acknowledge recent low inflation prints but still think it will be the northern hemisphere summer before the FOMC will feel sufficiently confident to cut rates. 

We forecast the FOMC will cut the target for fed funds by 100 bps taking the fed funds ceiling to 4.50% by year-end. We forecast the ECB will cut key policy rates by 150 bps by year-end.