Fed’s confidence in a soft landing grows

In Short

The Fed has got more confident that it can deliver a very soft landing, and that there is no need to compress growth below potential to bring back inflation to target.  It raised its Q4 2024 GDP forecast to 2.1%yoy (from 1.4%), some 0.3pp above its trend estimate. 



  • In sticking to its expectations of three rate cuts this year, the Fed revised up its growth forecast until 2026. Positive supply side developments, the FOMC believes, have made the economy more resilient to higher rates, allowing the Fed to remain patient on monetary easing.
  • The FOMC turned more tolerant on inflation, raising its YE forecast by 0.2pp to 2.6% but dismissed concerns about the recent data. The projected policy rate for YE 2025 has been raised by 25 bps, but the 2024 dot still envisages 75bp cuts this year despite more sluggish disinflation . The median expectation for the long-term rate is also up, by 10 bps, consistent with better trend growth and higher debt.
  • Powell strongly hinted that the Fed will soon slow the pace of Quantitative Tightening, but this does not imply a higher equilibrium value for the stock of asset holds, he added.
  • We stick to our view of three rate cuts this year, starting from June. Markets cheered the unchanged 2024 dot and overall dovish tone of the meeting, with the S&P closing at a new high and the 2 year rate losing 10bps


Download the full publication below

Fed’s confidence in a soft landing grows.

© Generali Investments, all rights reserved. This website is provided by Generali Investments Luxembourg S.A. (Generali Investments) and is considered as a marketing communication and financial promotion related its products and services. This website may contain information related to the activity of the following companies: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (including Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S.p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* and among its subsidiaries Global Evolution Asset Management A/S - including Global Evolution USA, LLC and Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC as well as Generali Investments CEE. *Includes Conning, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc., Goodwin Capital Advisers, Inc. (collectively, “Conning”).