- Don’t see a recession right now, sees a gradual recovery
- Expects inflation, including services, to come down
- Already have wage moderation, expect that to continue
- March and April will be key for a clearer picture on rate path
- Tariff threats are a great source of uncertainty
- But US tariffs won’t immediately trigger a 50 bps rate cut
March is already a given, so I would take it that he means the two more rate cuts after that are a fair assessment. As things stand, traders are pricing in ~84 bps of rate cuts for the year – including March. That fits with the current balance of risks in play. But if Trump were to go hard on his tariffs threat, I reckon we could see markets price in further downside on rates; even if it might just be a kneejerk reaction.
This article was written by Justin Low at www.forexlive.com.
