Monetary Policy Outlook - The Fed's excessive reliance on data dependence should be reduced, as the accumulated data for the last three to four months speaks volumes [2] - The Fed needs to move from a restrictive stance to neutral with dispatch, likely involving 25 basis point cuts at the next three to four meetings [3] - These cuts would bring the policy rate to a 3%-35% zone, considered neutral and consistent with the yield curve [3] - The current yield curve is not validated by the policy rate, and the Fed's actions will clear the path for normalization [4] Fed Internal Dynamics - There is genuine disagreement within the FOMC about the terminal rate, with some members not wanting it to be below 3%-35% [7] - Despite disagreements, there is a widespread consensus on the committee to move to neutral [8] - The Fed is likely to implement a steady march of 25 basis point cuts without explicitly promising to do so [8] Economic Impact - The absence of data in the short run due to the shutdown may reduce the Fed's data dependence [2] - The Fed's risk management assessment has tilted towards supporting the labor market [5]