Investor Presentaiton
Balanced Monetary Policy
Current economic conditions, characterized by easing inflation, receding
growth tailwinds and emerging "black swan" risk factors, require a more
balanced monetary policy framework than at any point earlier in the cycle
As inflation continues to moderate, simply holding the FFR constant will tighten monetary
policy as real rates become more restrictive
The Federal Reserve's current policy outlook does not appear to sufficiently consider
downside risks to economic growth
FOMC's September meeting dot plot forecasts one more rate hike by year-end 2023 and further
tightening of the real FFR into 2024 despite expectations of slowing growth and inflation
■ Over-tightening as economic growth slows could inadvertently catalyze a "hard landing"
Gradual normalization will still maintain ample policy space to cut rates substantially in
response to any economic shocks
Given the high starting level of the FFR, the Federal Reserve can begin normalizing the FFR to a
less restrictive stance while still preserving sufficient flexibility to ease more rapidly if needed
We believe the Federal Reserve should maintain rates at their current level and gradually begin
introducing a framework for less restrictive monetary policy (rate cuts) as inflation continues to
ease and there is greater uncertainty on economic growth outcomes
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