Fine-tuning our Fed Call: No need to skip October

W e have slightly altered our Fed call to include a cut in October of this year, where we previously forecast cuts in only September and December. The reason for adding another cut is threefold. First, the solid domestic demand observed in Q1 because of front running tariffs pull ed forward consumption and investment and weaken ed our outlook for business investment later in the year. Second, we did not see very much passthrough from initial March tariffs into March's low inflation figures, and businesses thus far have attempted to stave off price increases by in large for as long as possible. In this vein our Q4 inflation figure has been revised down nearly 20bps to 3.6% . Finally, we also expect the impact of tariff turmoil , immigration slowdown, and DOGE federal job losses to be more fully realized by Q3. The combination of these factors makes it less likely that the Fed will feel the need to skip an October. From September, we see consecutive cuts to normalize policy through April 2026 when the terminal rate of 3% (upper bound) is reached.