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Moving Closer To 50% Probability Of March Fed Cut

STIR
  • Fed Funds implied rates have lifted slightly overnight, consolidating a push to seeing just 14bp of cumulative cuts for March which then builds to 61.5bp for June and 140bp for end-2024.
  • U.Mich inflation expectations and existing home sales provide data interest whilst Fedspeak is watched on the final day before the FOMC blackout starts tonight. Daly (’24) and Goolsbee (’25) should see monetary policy relevant discussions in media interviews/a fireside chat, whilst VC for Supervision Barr (voter) speaks on bank regulation.
  • Daly last spoke on Dec 18, revealing she was part of the median dot seeing three cuts in 2024 to avoid overtightening, with two-sided risks. Goolsbee has spoken more recently in comments the day after CPI, saying the market may have put the cart before the horse on cuts. He added there’s been a very substantial drop in inflation over the last year but there’s good and bad news on inflation.

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