Institutions: 50BP Fed rate cut does not mean it is behind the curve

Winograd, head of developed market economic research at UnionBernstein Asset Management, said in a report that the median Fed's dot plot suggests the Fed will cut rates by 25 basis points at each of its next two meetings, and by 25 basis points per quarter thereafter. That means policy rates won't return to the neutral level the Fed expects until early 2026. The Fed cut rates by 50 basis points on Wednesday, but Winograd doesn't think the Fed is behind the curve.

He said, “Chairman Powell made it clear in his press conference that the Fed is in a favorable position to respond to the new information. With interest rates starting so high, the Fed can take more aggressive action if necessary.