USD: Surveys still suggest a case can be made for a September rate cut Consequently, markets are now pricing next to no chance of any action on 1 May with only 3bp of cuts priced by June, 20bp by September and 36bp by December. This is a remarkable swing given it was only three months ago that the market was fully discounting 150bp of rate cuts this year starting at the March FOMC meeting. We are forecasting the first move coming at the September FOMC meeting with two further cuts in November and December. Business surveys suggest more and more caution on the outlook for the economy with employment components pointing to a pronounced slowing in hiring in coming months. We also expect inflation to gradually converge on 2% as cooler economic activity and subdued labour cost growth help dampen price pressures, which in turn is compounded by softening pricing power. Nonetheless, there is little sign of this happening just yet and the risk remains that the Fed ends up bringing interest rates to a more neutral level more slowly and over a longer period than we are currently forecasting.