Fed to stress caution amid inflation uncertainty

We still expect the Fed to cut interest rates in June, although we don’t expect officials to provide a strong steer either for or against at next week’s FOMC meeting. The updated Summary of Economic Projections should show an upward revision to GDP growth for this year with core PCE inflation modestly above the 2% target by year-end. (See here.) Under those circumstances, we expect the median projection to still show three 25bp rate cuts this year, although it would only require one or two centrist officials to shift their stance to move that median projection to two cuts.