We remain of the view that unless the annual trend improvement in core PCE inflation stalls or starts to reverse, the improved inflation backdrop will allow the FOMC to start cutting rates gradually around mid-year.

We currently have July pencilled in for the start of the rate cutting cycle. We also think the FOMC needs to be patient and cautious in advancing forward guidance around the expected timing of rate cuts. We will be watching incoming data closely and fine tune our forecast path accordingly. 

We expect the target rate will be cut by 100 bps this year and 200 bps over the cycle. We expect cuts to occur in 25 bps increments and end in June 2025.