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Easing inflation to drive rates sharply lower next year

The Fed is set to keep rates unchanged at 5.25%-5.50% at the FOMC meeting next week and the new projections could show that plans for further hikes have been scrapped. We continue to expect the Fed’s next move to be a rate cut in early 2024, with a rapid decline in inflation convincing officials to cut more aggressively than markets are pricing in.

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