The Fed cuts and remains committed to limited further easing.

Highlights

• The widely expected cut faced both hawkish and dovish dissent. The Fed has chosen to stick to the plans outlined in September, i.e. a rate cut in both 2026 and 2027. The outlook for growth and inflation has improved, but not that for the unemployment rate.
• Incomplete data and the tension between upside risks for inflation and downside ones for employment suggest caution, and, with the policy rate now within the neutral range, the Fed sees itself in a good position to respond to possible surprises. 
• The Fed will start buying T-bills to keep an ample supply of reserve; it aimed at smoothing the functioning of overnight market and does not represent a change in monetary policy
• We stick to our forecast of another- and final - cut next year, but it may occur later than March, especially if growth picks up in Q1. The market pricing of more than two cuts remains too dovish 

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