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Fed Rates Drift Lower, NY Fed Staff See Core PCE At 2% For End-2024

STIR
  • Fed Funds implied rates have pushed lower through a particularly light session, moving back close to post-FOMC lows.
  • Cumulative cuts from 5.33% effective: 4.5bp May, 21.5bp Jun, 34bp Jul, 54bp Sep and 84bp Dec.
  • NY Fed economists today published updated results for their DSGE model. Of note, end-2024 GDP growth was revised to 1.9% Y/Y from 1.2% at the Dec’23 update whilst core PCE inflation was revised 0.2pps lower to 2.0% Y/Y.
  • The latter is in contrast to the median FOMC participant this week revising core PCE higher to 2.6% from 2.4% in the Dec SEP (and with 2% being below the full FOMC range of 2.4-3.0% for end-2024).
  • Still to come, Bostic (’24 voter) speaks in a moderated discussion about household finances at 1600ET (no text). He revealed his above-median dot after the Dec SEP - looking for two cuts in 2024 - and will be watched for a similar indication today.

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