It's all about the labor market at this point which is continuing to show signs of weakness. Fed sees the funds rate being 125bps lower by end of next year. They could very well be wrong again though.
PCE is running at 2.7% annual right now which isn't far off the arbitrary 2% target. If not for some very misleading ways home & shelter are calculated we would pretty much be there already. Leaving rates unnecessarily high is only driving real inflation up. Home prices & borrowing costs are not calculated in CPI or PCE but have an outsized effect on real inflation. Not to mention the divergence with the rest of the world cutting rates now - ECB, Canada, etc are going to create big risks here if they leave our rates high and more money starts flowing in here driving real rates & inflation up more.
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