The FOMC meets next week, faced with an economy facing downside risks to the labour market but still-firm inflation. That they will cut interest rates is not really in question. The Chair widely flagged such a move last month, noting that “the time has come for policy to adjust”. However, he noted that the “timing and pace of cuts” will depend on an “evolving outlook” and the “balance of risks”. While there have been clear signs of labour market softness, this week’s inflation reading was a reminder that upward price pressures persist. The fed funds rate in 2025, which is