Fed to cut rates as core inflation normalises

We expect GDP growth to slow from 2.1% this year to only 0.8% in 2024, with the economy still likely to experience a near recession around the end of this year. Core inflation will continue to fall back to the 2% target by mid-2024, with much of the coming disinflation already baked in. Under those circumstances, we suspect the Fed will eventually abandon its higher for longer rhetoric, and cut interest rates by a cumulative 200bp next year.