The economy’s third-quarter strength was not the start of a renewed acceleration and we continue to expect GDP growth to weaken. Regardless, resilient economic growth has not prevented a continued easing in wage and price inflation, and we still think the latter will be close to the Fed’s 2% target by the middle of next year. Although markets now agree that the Fed’s tightening cycle is over, we still see scope for rates to be cut more aggressively next year than market pricing implies.
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