We know it takes a while for our decisions to fully affect the economy.... We've got to make our decisions and then watch what happens, get that feedback, see how the economy's behaving.

– John Williams, New York Fed President, May 16, 2023

At this point, based on the data I have so far, given how stubborn inflation has been, I can't say that I'm at a level of the fed funds rate where it's equally probable that the next move could be an increase or a decrease.

– Loretta Mester, Cleveland Fed President, May 16, 2023

Futures market participants are pricing in 50 basis points of rate cuts before the end of this year and a further 100 to 125 basis points by the end of 2024. While the Fed would dispute the expected timing and perhaps the amounts, directionally the U.S. looks to be getting much closer to the start of an interest rate easing cycle.

In this Economics Weekly, we examine previous easing cycles—how long rates stay at their peak levels before easing starts, how large is the first cut, and how much do rates decline in 12 months and over the entire cycle—and whether we can draw any conclusions regarding the easing cycle we might be in for when the next one finally gets underway.

For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.

Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.