The average time from the last hike in a cycle to the first cut is just over five months. If looking at the current market pricing, the forward curve suggests that a 25bp rate cut compared to where the curve peaks is in prices roughly 4.5 months after the peak.
Our baseline scenario expects the Fed unable to cut rates until well into 2024. After all, one of the important lessons of the 1980s was not to cut rates prematurely after a period of inflation clearly exceeding the target.
-Nordea
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