As core PCE inflation is on track to return to the 2% target by the middle of this year, we expect the Fed to cut interest rates by 25bp at every meeting from March onwards, with rates eventually falling to between 3.00% and 3.25% in early 2025. The lagged impact of previous monetary tightening will continue to feed through in H1, however, pushing GDP growth below potential. But rate cuts should fuel a pick-up in GDP growth in the second half of the year.
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