Cit Lowers Easing Expectation to 25bps by Fed Next Week, Sees 50bps in Nov and 50bps in Dec, Total Cuts by Y/E of 125bps
Cit Still Sees 25bps Easing by Fed Next Week, Sees 50bps in Nov and Dec, Total Cuts by Y/E of 125bps
The analyst comments "Labor market data show an economy sliding toward recession with the rise in the unemployment rate likely to accelerate in coming months. We shifted our base case to a 25bp rate cut next week from a 50bp cut, but that remains a close call. Stronger-than-expected shelter inflation may be enough to prevent the committee from agreeing to a larger cut. But with the pace of core PCE inflation having slowed to 2% over the last three months and the likelihood of further softening in labor markets, the committee is likely to pursue a more aggressive pace of cuts over the remainder of this year and potentially continuing next year. We project 50bp cuts in November and December for a total of 125bp this year."