A modest Fed shift
1. The Fed lowered the funds rate by 25bps in December, bringing the midpoint down to 3.625%, matching what markets were hoping for.
2. Even with the cut, policymakers stuck to their earlier view that only one more reduction is likely in 2026 and another in 2027.
3. The Committee still sees rates landing near a neutral 3.125% by the end of 2027, which is slower than the market’s expectation of reaching neutral by late 2026.
Instrument: USD | Sentiment: Negative
