Fed Policy

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.

The Federal Reserve began the process of normalizing interest rates at the September 18th, 2024 FOMC meeting. While the timing of the first rate cut was telegraphed well in advance, the magnitude—25 or 50 basis points—was not. A week prior to the meeting, market pricing, as well as

Most of the Personal Consumption Expenditures (PCE) inflation gauges are sourced from Consumer Price Index (CPI) data, but Producer Price Index (PPI) input data is of increasing relevance, import price index (IPI) data can prove occasionally relevant. There are also some high-leverage components that only come out on the

“The time to support the labor market is when it’s strong, and not when you begin to see layoffs.”

We will be hoping for two things at the September meeting this week: a 50 bps cut and minimal upwards revisions to the unemployment rate projections in the Summary of Economic Projections (SEP).

Our new baseline is a 50 bps cut with a total of 75 bps of cuts in the SEP for 2024. It’s a close call but we think a 50 bps cut is more likely than a 25 bps cut. We think a 50 bps point cut is the right move.

Even though today’s report gave back some of the weakness in the July household survey, the reversion was slight. The August report meets the conditions we laid out yesterday for a 50 bps cut in September to play catch-up.