- Fed has cut rates by 25bp today (11 to 1 vote)
- 50bp cuts “expected” in both 2025 and 2026
- Unemployment expected to stay around 4.3%
- Economy continues to grow
The comments and answers from Jerome Powell imply that the Fed feels they will achieve a soft-landing (“avoided a recession”). As usual the Fed is more concerned about inflation than unemployment, and if unemployment spikes in 2025 that may be an unpleasant shock to the market. While Powell would not commit to the number of expected cuts, the strong implication was slowed pace with the committee trying to understand how the planned Trump admin tariffs might impact inflation. The markets have so far been responding unfavorably to the news.