“To make the case for Fed cuts outside of a recession, the FOMC would have to conclude that policy is actually restrictive,” argue TD Securities analysts and go on to explain: “Given that most estimates of the neutral rate in the Fed’s dot plot are above current levels, Fed officials would have to reduce their estimates of r*. The distribution of longer-run dots have drifted modestly lower, but we see a fairly high hurdle for the median to fall below the current fund rate range. Indeed, a case can be made for a somewhat higher neutral rate “” particularly if productivity improves.” “Recent increases in productivity growth create a complicated environment for considering the possibility of Fed rate cuts: inflation may be lower as a result, but the neutral policy rate (r* in real terms) should be higher.” “This observation contrasts with current market pricing, suggesting the market-implied likelihood of rate cuts this year may be over-estimated. Look for markets to reprice slowly if productivity gains continue, more quickly if inflation stabilizes or rises later this year. If inflation slows unexpectedly, however, a broader rethink of the neutral rate by Fed officials becomes more likely.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next USD/JPY finally breaks 112.00 and jumps to 4-month highs FX Street 4 years "To make the case for Fed cuts outside of a recession, the FOMC would have to conclude that policy is actually restrictive," argue TD Securities analysts and go on to explain: "Given that most estimates of the neutral rate in the Fed's dot plot are above current levels, Fed officials would have to reduce their estimates of r*. The distribution of longer-run dots have drifted modestly lower, but we see a fairly high hurdle for the median to fall below the current fund rate range. Indeed, a case can be made for a somewhat higher neutral rate "” particularly if… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.