We won’t declare mission accomplished on inflation.The labour market is strong, want to keep it that way.Fed policy is still in a net tight position.An uptick in unemployment is a bigger risk than inflation.There is lots of ambiguity around what the neutral rate level is.I expect smaller steps going forward for the Fed.A 50 bps rate cut was a meaningful step to get the process moving.The FOMC meeting had active deliberations over Fed rate cut.A 25 or 50 bps rate cut, both would have been reasonable.The election is not a factor in Fed rate decision.There’s lots of uncertainty abour where the Fed will cut to.I would love to get back to 3.5% unemployment rate.The labour market has not been driving inflation.Job market a lousy forecaster of inflation.Penciled in 50 basis points more cuts in 2024.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
