Stronger non-farm payrolls reduce urgency for the Fed to ease. A resilient labour market means policymakers can wait for clearer disinflation before cutting.
My base case: two cuts this year, likely in the second half.
Why not more?
• Jobs growth remains firm
• Wage pressures have not fully cooled
• Core inflation is easing but not convincingly at 2%
Why not zero?
• Policy is still restrictive
• Growth is slowing gradually
• Financial conditions could tighten unexpectedly
Risk scenario: if inflation re-accelerates, we may see only one cut. If growth cracks sharply, three cuts return to the table.
For markets, timing matters more than count. Later cuts support risk assets, but delay near-term liquidity boosts.
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