The Federal Reserve's recent signals suggest a significant shift in monetary policy is approaching. Our analysis of FOMC minutes, economic indicators, and historical precedent points to a critical inflection point in Q2 2025.
## Key Indicators
Three primary factors are driving this assessment:
1. **Inflation trajectory**: Core PCE has stabilized below 2.5% for three consecutive months
2. **Labor market cooling**: Job openings have declined 15% from peak levels
3. **Credit conditions**: Bank lending standards continue to tighten
## Market Implications
If our projection holds, we expect:
- 10-year Treasury yields to compress by 50-75 basis points
- Small-cap equities to outperform large-caps by 8-12%
- Dollar weakness against major currencies
The timing of this pivot will be crucial for portfolio positioning.