Fed doubles down on 'higher for longer'

The Fed doubled down on its mantra that interest rates will remain higher for longer, with its updated projections suggesting that the economy will enjoy the softest of soft landings and core inflation will still take some considerable time to return to the 2% target. We disagree. We expect the real economy to be considerably weaker and that core inflation will fall much more quickly, which will persuade the Fed to cut rates more aggressively next year, if only to prevent a tightening in the real stance of policy.