Macro Insights Weekly - What if 2% inflation remains elusive?

US inflation's bumpy ride to 2% has pushed back rate cut expectations substantially. We are less hawkish than the oscillating markets, and see 150bps of rate cuts during 2024/25.
We are revising up our 2024 average US headline inflation forecast by 30bps to 3.3%.
We expect a shallow rate cut cycle, short of a major demand shock in the coming 18 months.
Various measures of inflation converging toward 2.5% would be sufficient for the Fed to ease.
Two rate cuts in 2024 are on the cards, in early 3Q and 4Q.
As growth and inflation slows in 2025, an additional 100bps of rate cuts will follow, in our view.