The Race Between The Fed Cuts And A Recession (SP500)

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The race against recession

Until the December FOMC meeting, the Fed was signaling that it needed to induce a recession to bring down inflation – that was the “higher for longer” policy. The Fed was willing to hold interest rates at

Theme

Near Term

First cut

Dec 2024

Terminal (2.5% long-run neutral – dot plot)

Soft landing – normalization

Pause 5.33%

March (prob. 81%)

3.73% (Fed: 4.6%)

3.03% Oct 25 (Fed 25: 3.6%, Fed 26: 2.9%)

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