Fed FOMC meeting minutes reinforce cautious pause on interest rates as inflation cools but economic risks pervade. RBC Capital Markets Head of Rates Strategy Blake Gwinn says stock markets sold off early in 2023 on inflation and supply worries, but the second half of the year data showed progress — especially on CPI (Consumer Price Index) prints — which he says “[changes] the context.”
Investors still expect future rate cuts as conditions improve, which Gwinn agrees with but emphasizes persisting uncertainties. Gwinn believes the economy’s resilience may force the Fed to “proactively” ease tightness before a hard landing scenario appears on the horizon. Gwinn notes better data has shifted views to soft-landing optimism, but real uncertainty hovers around exactly when to shift monetary policy from a restrictive stance.
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