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Rising Macro Risks May Limit Fed From Reaching Its Projected Peak
After hiking its policy rate at 10 consecutive meetings since March 2022, the U.S. Federal Reserve paused in June, but expects more tightening ahead. Given strong recent economic data and the Fed’s revised projections, we believe this pause is likely a “skip” and that we’ll see another – and probably final – rate hike in July. Further out, our base case includes a weakening U.S. economy in late summer or fall that will likely prompt the Fed to pause hikes past July. However, if continued strong data pressures the Fed to keep hiking, the risk of a sharper slowdown will likely increase. Fed officials are ... (full story)