How Many Eases?
The strong payroll got me to thinking about the cumulative amount of eases in the current easing cycle. The markets are currently pricing in less than 160bps. My central scenario of the number of eases is between 150-250bps of ease, assuming a long term neutral rate of 2.75-3.00%. The reason for the wide range is it’s unclear how the economy and inflation will evolve. Also, some discounting of eases occurs when they are further out the curve.
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