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Fed dovish today, but should turn more hawkish later

The Fed opted to leave its key policy rate unchanged at 0.25% to 0.50% today, while also lowering its projections for the pace of future rate hikes. Nevertheless, as inflation continues to rise and global risks diminish further, we expect the Fed will resume raising interest rates in June. Thereafter, we think a marked acceleration in inflation will force the Fed to raise rates much faster than is widely appreciated.

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