Podzept from Deutsche Bank Research
Macro MATTers: The outlook for the Fed, Quantitative Tightening, Rates & Inflation
Jan 22, 2024
Discussion on potential rate cuts, the Fed's balance sheet and QT. Analysis of recent inflation readings and implications for rate cuts. Triggers for rate cuts and scenarios for the labor market. Examining the outlook and process of quantitative tightening. Exploring the views on QT while interest rates are cut and discussing yield forecasts.
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Quick takeaways
- The Fed is expected to begin cutting interest rates in June 2024, with a total reduction of 175 basis points by early 2025, depending on inflation moderation and a softening labor market.
- Inflation decline and a more balanced labor market increase the likelihood of a soft landing for the economy, and the Fed's ability to pivot towards a dovish direction helps ease financial conditions and promote growth.
Deep dives
Outlook for the Fed and Interest Rate Cuts
The podcast discusses the outlook for the Federal Reserve (Fed) and the potential for interest rate cuts in 2024. While the market is pricing in more aggressive rate cuts, the baseline view is that the Fed will begin cutting rates in June and reduce rates by a total of 175 basis points by early 2025. The decision to cut rates will depend on the moderation of inflation and a softening labor market. The Fed aims to prevent over-tightening monetary policy and ensure a soft landing for the economy.
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