Explains the Fed held rates high due to high inflation and a solid labor market, then cut rates as inflation fell and the labor market showed weakness, moving to a more neutral stance. States they have now cut 175 basis points and feel well-positioned to wait and see how the economy evolves.

Attributes the strong growth/low unemployment dynamic to higher productivity, which may be partly due to AI but has been structurally higher for years. Notes that 2% annual productivity allows sustained higher growth without more job creation, which is ultimately a good thing for incomes.