U.S. Fed could cut rates twice this year: Deutsche Bank Private Bank

So there were two more, you know, very important things happening last week. On the one hand, it was Jay Powell’s comment around. You know there will be no rate hikes going forward and if you remember we are in the camp of seeing still two rate cuts for this year. We have been, you know your steadfast in regards to looking at this scenario since the beginning of the year when everybody was pricing a lot of cuts and then swung around to possibly talking about rate hikes. So in the context of this comment and and also in terms of you know the the data that you mentioned on the unemployment side, this obviously is conducive to an environment where you look at what you mentioned the dual men that they have. They need to see some significant cooling in both inflation and the job market side. So there was some cooling now on the job market side revisions for the last two months as well. Now we have to wait until the middle of this month to get more inflation reads. So, but I think it’s been a good start. And so like reinforcing the view that I hold that we hold that we would see cuts this year. How many cuts? Sorry, she said two. But can I say to that effect because basically what you’re suggesting is that you’re in line with what the Fed is believing in terms of four, six effectively you’re looking for 75. By the end of the year, 2 cuts, effective rate right now 525 but 5:30. So roughly speaking, you’re in line with the Fed. So then what are your inflation expectations to that effect? Because they would have to then be, I suppose, taken as a guide as to how the Fed would have to see it at the same time as well to to do the cuts that you’re talking about. So where do you think we are looking? Yeah, well, there’s two ways of looking at it, #1 is now we assume that Jay Powell and there was some rhetoric around it, is convinced that inflation, that this inflationary trend will continue, which is? Which is what we see as well. But the second element to that is if the economy is still growing very fairly robustly and we have inflation that is still overshooting. But at the same time, there are other indicators that the economy is cooling down, that this may be enough to start at least a cutting cycle. Because there has been a very strong pivot put in by the Fed earlier to say we will start cutting. And I think that was just reinforced at last week’s meeting at a time where the market has been pricing something differently and was probably needed to hear that from the Fed. So I think that’s important.