Research Plan Confirmation

Of course. Navigating conflicting expert forecasts requires a structured approach to understand the underlying reasoning and prepare for multiple potential outcomes. Here is a comprehensive research plan designed to provide actionable insights for your client advisory.

This plan is divided into two main parts:

1. Information Collection: How to gather the necessary data through web searches and structured expert discussion.
2. Information Analysis: How to synthesize the collected information using a professional framework to generate actionable strategic advice.

Research Proposal: Analyzing 2026 Federal Reserve Rate Policy

1. Research Goal and Final Output

Given your role as a financial professional advising clients, the ultimate goal is not to predict the single "correct" number of rate cuts, but to develop a strategic framework for advising clients under high uncertainty.

Your final output will be a Strategic Advisory Report on 2026 Fed Policy, which will include:

1. Three Core Scenarios: A detailed description of 3-4 plausible future scenarios for 2026 Fed policy (e.g., "Aggressive Easing," "Cautious Normalization," "Hawkish Hold").
2. Key Drivers & Assumptions: An outline of the economic conditions (inflation, employment, etc.) and assumptions that underpin each scenario.
3. Critical Signposts: A checklist of specific, observable data points (e.g., "Core PCE inflation prints below X% for two consecutive quarters") that would indicate one scenario is becoming more likely than the others.
4. Client Advisory Playbook: Actionable investment and business decision-making guidance tailored to each scenario, allowing you to provide proactive advice as the economic picture evolves.

Part 1: Information Collection

To build this analysis, we first need to systematically gather information on the reasoning behind the diverse expert opinions.

Recommended Framework: Scenario Planning

• Framework Teaching: Scenario Planning is a strategic tool used to navigate high levels of uncertainty about the future. Instead of trying to create a single forecast, it involves developing several distinct, plausible "future worlds" or scenarios. The process focuses on identifying the key driving forces of change, understanding how they might interact, and preparing a flexible strategy that can succeed across multiple potential outcomes. It's about being prepared, not about being right.
• Applicability Explanation: This problem is a perfect fit for Scenario Planning because there is no expert consensus and the outcome depends on several volatile variables (inflation, labor market, Fed leadership). This framework will allow you to move beyond simply collecting forecasts and instead analyze the underlying systems of belief held by different experts, which is the core of your research goal.
• Key Information to Collect: To build our scenarios, we need to understand how different experts view the key driving forces, specifically:
  • The likely trajectory of inflation and labor market data through 2025 and 2026.
  • The potential impact of the Fed Chair transition in May 2026 on policy continuity.
  • The specific conditions under which experts would change their current forecasts.

A. Web Search Plan

Your initial search provided an excellent overview of the different forecasts. The next step is to dig into the justification behind those numbers.

B. Recommended User Research Method: Discussion (discussionChat)

• Recommendation Rationale: The core of this research challenge lies in the disagreement among experts. A series of individual interviews would capture each perspective in isolation, but a group discussion will force the different viewpoints to interact. By observing how advocates for different scenarios (e.g., "three cuts" vs. "no cuts") challenge each other's assumptions and defend their own, you will gain a much deeper insight into the conviction behind the forecasts and the critical points of contention. This method directly simulates a high-level investment committee debate, which is the most effective way to uncover the insights you need for your advisory.

• User Research Planning:

  • Research Subjects: You will convene a moderated discussion with 4-5 AI personas representing the key divergent viewpoints in the market.

    • The Dove (Represents the 3-cut view): An economist focused on the risk of a weakening labor market and believes inflation will fall faster than expected.
    • The Hawk (Represents the 0-cut view): A strategist who believes inflation will remain sticky and that the economy is resilient enough to withstand higher rates for longer.
    • The Centrist (Represents the 1-2 cut view): A former central banker who closely follows the Fed's stated data-dependency and believes in a cautious, gradual approach.
    • The Political Analyst: An expert focused on the Fed Chair transition and the political pressures that could influence monetary policy.
    • The Moderator (You): To guide the conversation and probe for deeper insights.

  • Research Purpose: To pressure-test the different expert forecasts against each other, identify the most critical underlying assumptions, and understand what specific economic data would cause each expert to change their mind.

  • Core Discussion Topics:

    1. Opening Statement: "Please state your baseline forecast for the number and timing of Fed rate cuts in 2026 and the two most important factors driving your view."
       • Analysis Purpose: To establish the starting position and core thesis of each expert.
    2. Scenario Shock Test: "Let's imagine it's April 2026. Core PCE inflation for Q1 has re-accelerated to 3.2% year-over-year, but the unemployment rate has also ticked up to 4.5%. What is the Fed's move in June, and why? How does this data affect your forecast?"
       • Analysis Purpose: To force experts out of their baseline and reveal how they weigh the conflicting goals of the Fed's dual mandate. This directly tests the rigidity of their models.
    3. The Leadership Question: "Jerome Powell's term as Chair expires in May 2026. How much does a potential change in leadership weigh into your forecast? To the Hawk and Dove, how does a new, politically-appointed Chair potentially alter the Fed's reaction function?"
       • Analysis Purpose: To isolate the "human factor" and understand the perceived risk of a policy shift driven by politics rather than just economics.
    4. "Show Your Cards" Question: "What is the single most important data release or event between now and September 2026 that would have the highest probability of making you abandon your current forecast and adopt the opposing view?"
       • Analysis Purpose: This is the most crucial question. The answers will directly provide the "signposts" needed for your Scenario Planning analysis and client advisory playbook.

Part 2: Information Analysis

After collecting the web search data and discussion transcripts, you will use the Scenario Planning framework to synthesize this information into your final advisory report.

A. Synthesize and Map the Driving Forces

1. Create a Master Table: Build a table with the key driving forces as columns (e.g., Inflation Trajectory, Labor Market Strength, Fed Leadership Style) and the expert personas/banks as rows.
2. Populate the Table: Fill in the cells with the specific views and data thresholds mentioned by each expert during the discussion and from your web research. For example, under "Inflation Trajectory" for the Dove, you might write: "Expects core PCE to fall below 2.5% by mid-2026." For the Hawk, you'd write: "Sees core services inflation remaining stubbornly above 3%."

B. Build the Scenarios

1. Select Scenario Axes: Choose the two most critical and uncertain driving forces from your table. Based on the research, these are clearly "Inflation Trajectory" (from "Rapid Disinflation" to "Persistently Sticky") and "Labor Market Health" (from "Resilient/Strong" to "Clearly Weakening").
2. Create a 2x2 Matrix: Draw a four-quadrant matrix with these two axes.
3. Develop Scenario Narratives: Give each quadrant a memorable name and write a 1-2 paragraph narrative for what that "future world" looks like, assigning a rate cut forecast to each.
   • Quadrant 1: Hawkish Hold (Sticky Inflation, Strong Labor): In this world, the economy remains surprisingly resilient, but inflation stays stubbornly above the Fed's target. The Fed has no reason to cut and may even consider a hike as J.P. Morgan suggests. (0 cuts)
   • Quadrant 2: The Soft Landing (Rapid Disinflation, Strong Labor): This is the ideal outcome. Inflation falls back to target without significant job losses. The Fed feels comfortable making one or two "normalization" cuts. (1-2 cuts)
   • Quadrant 3: Recessionary Easing (Rapid Disinflation, Weak Labor): A sharp slowdown or recession forces the Fed's hand. They cut aggressively to support the labor market, as inflation is no longer a concern. (3+ cuts)
   • Quadrant 4: Stagflation Trap (Sticky Inflation, Weak Labor): The worst-case scenario. The Fed is caught between fighting inflation and supporting a deteriorating job market, leading to policy paralysis or a difficult choice. (0-1 highly uncertain cuts)

C. Define Signposts and Formulate Strategy

1. Identify Signposts: For each scenario, pull the specific data points your experts said would change their minds. These are your signposts.
   • Example for "Recessionary Easing": A signpost could be "Two consecutive monthly unemployment reports showing the rate at 4.5% or higher" or "Core PCE inflation prints below 2.5%."
2. Create the Client Playbook: Structure the final section of your report around these signposts.
   • "Watch for these 5 signposts...": List the most critical data points.
   • "If you see Signpost A (e.g., rising unemployment), it means the 'Recessionary Easing' scenario is becoming more likely."
   • "Our advisory for this scenario is to...": Provide the specific, pre-prepared investment advice (e.g., "...increase allocation to long-duration government bonds and defensive equities.").

By following this plan, you will transform a confusing array of opinions into a structured, actionable framework that provides immense value to your clients, empowering them to react intelligently as the future unfolds.

Discussion completed. 5 participants discussed.

Discussion Summary: Where agreement clustered (consensus = validated insight)

• Near-term caution on easing if inflation re-accelerates: Multiple participants converged on the view that a renewed rise in Core PCE to materially above target would substantially raise the bar for cuts. Concrete examples:

  • Evelyn Thorne: “My decision for June would be an unequivocal hold” with Core PCE at 3.2%.
  • Lena Fischer: “This scenario…would be to hold rates” and said a 3.2% Core PCE “would severely test the Fed’s credibility.”
  • Dr. Evelyn Reed: “My call for June would be a resolute hold.” These three distinct personas all arrive at the same operational decision for the June meeting (hold) given the exact scenario (Core PCE 3.2%, unemployment 4.5%), validating a core consensus that elevated inflation outweighs reasons to ease in that circumstance.

• Recognition that employment and financial-market stress matter materially: All participants acknowledged that labor-market deterioration or market strain is a legitimate input into policy. They differed on weight, but none dismissed these channels.

  • Dr. Elias Vance: Explicitly prioritized rising unemployment (4.5%) as a reason to cut.
  • Jax Sterling: Emphasized market dynamics—“credit markets will seize, equity volatility will EXPLODE”—as a forcing mechanism for cuts.
  • Even the “hold” camp (Thorne, Fischer, Reed) admitted labor/market stress is important, but they prioritized inflation credibility instead. This shows cross-panel validation that both employment and financial conditions are binding considerations for the Fed.

• Importance of credibility and institutional independence: Multiple experts flagged Fed credibility as a decision constraint, especially around leadership transition.

  • Evelyn Thorne: Warned easing with 3.2% Core PCE would “erode our credibility.”
  • Dr. Evelyn Reed: Said cutting would “fundamentally compromise the Fed’s institutional credibility” and set a bad precedent. The group consistently treated credibility as a high-order constraint on policy decisions.

Where disagreement occurred (tension = market segmentation or risk)

• How to weigh employment versus inflation in the face of conflicting signals:

  • Pro-cut cluster: Dr. Elias Vance (three cuts, March/July/November; 4.50–4.75% by December) and Jax Sterling (two cuts, June/November; 4.75–5.00% by December) argued that rising unemployment/market stress can and should trigger cuts even if inflation is elevated.
    • Vance: “The Fed must cut in June” because unemployment at 4.5% signals dangerous slack.
    • Sterling: Cuts will come because markets will force liquidity provision; “the market’s pain demands liquidity.”
  • Anti-cut cluster: Evelyn Thorne (zero cuts; stay 5.25–5.50% through December), Lena Fischer (two cuts but later and conditional on global forces; final 4.75–5.00%), and Dr. Evelyn Reed (hold in the stressed scenario) prioritized inflation anchoring over immediate labor-market/market pressures.
    • Thorne: “Hold” to preserve price stability and avoid re-igniting inflation.
    • Fischer: In the stressed scenario she pivoted from her baseline to “hold,” explicitly citing credibility concerns. This cleaves the panel into two camps: those willing to ease to address employment/market stress vs. those who will hold to preserve inflation credibility. That tension maps to policy risk (premature easing vs. delayed easing) and market segmentation (participants pricing cuts vs. Fed potentially holding).

• The role of market pressure as a legitimate policy input:

  • Sterling presented a strong, instrumentalist view: market stress will “force” the Fed to cut; policy follows market functioning.
  • Thorne and Reed rejected that notion as overstating market influence, instead defending institutional independence. This disagreement exposes a cleavage over whether the Fed is primarily a technocratic rule-based institution or a pragmatic crisis manager responsive to market stress—important for forecasting tail risk scenarios.

• Timing and magnitude of cuts in central forecasts:

  • Dr. Vance: three 25bps cuts (March, July, November).
  • Fischer and Sterling: two cuts (Fischer in H2; Sterling June & November).
  • Thorne: zero cuts.
  • Reed: aligned with hold in the stress test. Differences in exact meetings and final fed funds ranges show material segmentation on pace of easing—market pricing (CME FedWatch) expecting two cuts sits between these views, reflecting uncertainty.

Did anyone change their position? (persuasion = messaging opportunity)

• Lena Fischer adjusted conditionality when pressed by the scenario and credibility arguments:

  • Baseline: two cuts in the second half of 2026 (to 4.75–5.00%), driven by global disinflation.
  • After the hypothetical April outcome (Core PCE 3.2%, unemployment 4.5%) and Dr. Reed’s credibility critique, Fischer stated she would hold in June and that the 3.2% print “would certainly push out the timing of any cuts.”
  • Concrete example: “While global disinflation remains a structural force, it cannot override a clear domestic re-acceleration of inflation. My decision for the June meeting would be to hold rates.” This represents a conditional retreat from her baseline timing (not a full abandonment of two cuts for the year), illustrating persuasion by credibility and domestic inflation concerns.

• No other panelist explicitly reversed a baseline forecast in-session, but several hardened their stances when challenged:

  • Thorne and Reed doubled down on hold/zero-cuts even under market-pressure arguments.
  • Vance maintained his three-cut plan and defended cutting in June despite the 3.2% Core PCE reading. These non-shifts reflect strong conviction on both sides rather than movement to a middle ground.

Unexpected themes that emerged (emergence = innovation opportunity)

• Leadership transition as a multiplier on credibility risk:

  • Several participants emphasized that Powell’s term expiration in May 2026 amplifies the cost of any perceived policy inconsistency.
    • Dr. Reed: Cutting in June “would fundamentally compromise the Fed’s institutional credibility… especially with the Chair transition in May.”
    • Fischer echoed that a 3.2% reading “with a new Chair… would severely test the Fed’s credibility.” This made the Chair transition an outsized signpost—an emergent theme beyond the original question of cuts/counts. The panel treated the personnel change as tightening the political and reputational constraints around any early easing decision.

• Market microstructure and liquidity dynamics as an independent forcing factor:

  • Sterling’s framing that markets can effectively coerce central-bank behavior is an emergent operational theme: the idea that financial conditions, credit seizures, or volatility spikes can outweigh pure data-readings in near-term policy decisions.
  • Concrete claim: “When unemployment starts ticking up like that, even with sticky inflation, credit markets will seize, equity volatility will EXPLODE… The Fed knows this. They'll prioritize preventing a systemic meltdown.” This injects a distinctly market-structure-led risk scenario that is not reducible to inflation/unemployment thresholds alone.

• Differing operationalizations of “unemployment” in modern context:

  • Dr. Reed and others hinted that a headline unemployment rate (4.5%) might not be equivalent historically due to changed labor-market structure (participation, wage dynamics, job-switching). Though not extensively quantified, this raises an emergent methodological theme: how to interpret conventional thresholds in a structurally different labor market.

• Credibility vs. cyclical stabilization as a binary political-economic framing:

  • The debate crystallized into more than technical differences; it became a debate over institutional mission and political risk:
    • Thorne/Reed: Emphasize long-run credibility, defend independence.
    • Vance/Sterling: Emphasize short-run employment/market-stability imperatives and a willingness to act even if inflation is temporarily elevated. This emergent framing suggests the Fed’s 2026 decisions will be perceived through a political lens, particularly around Chair succession.

Concrete signposts and thresholds discussed (examples cited)

• Core PCE thresholds:
  • Dr. Vance’s easing threshold: Core PCE ≤ 2.5% sustained.
  • Stress scenario: Core PCE = 3.2% YoY used repeatedly as the pivot that intimidates easers and emboldens hawks.
• Unemployment thresholds:
  • Dr. Vance’s easing trigger: unemployment > 4.2% (he cites 4.5% in the scenario as justification to cut).
  • Others treat 4.5% as insufficient reason alone to ease if inflation is far above target.
• Meeting-level timing:
  • Specific meeting calls were offered by multiple panelists (Vance: March/July/November; Sterling: June/November; Fischer: H2; Thorne: none), allowing clear mapping of disagreement to calendar risk.
• Market signals as functional triggers:
  • Sterling named credit-market seizures, equity volatility spikes, and tightening financial conditions as non-standard but decisive triggers for policy action in his view.

Conviction levels and uncertainty ranges (implied from statements)

• High conviction (low willingness to change):
  • Evelyn Thorne and Dr. Evelyn Reed showed high conviction in holding to price-stability-first prescriptions; neither budged in the face of market-pressure arguments.
• Conditional/mid conviction:
  • Lena Fischer’s baseline (two cuts) was explicitly contingent on global disinflation; she revised to hold in the stress scenario, demonstrating conditional conviction—willing to pivot if domestic data prove adverse.
• Opportunistic/market-driven conviction:
  • Jax Sterling expressed high conviction that market mechanics will ultimately force easing; more confident about market-driven outcomes than about pure-data driven Fed conservatism.
• Dr. Elias Vance: high conviction for ease when labor slack emerges; he maintained his three-cut plan even in the conflict scenario.

Key points of contention that shape downside/upside risks

• Premature easing risk: If the Fed cuts while Core PCE is still substantially above 2%, hawkish participants warn about re-anchoring inflation expectations and loss of credibility.
  • Example: Thorne: “Easing policy before we have unequivocal, sustained evidence… risks re-igniting… structural imbalances.”
• Delayed easing recession risk: If the Fed delays easing while unemployment rises and markets tighten, pro-ease participants warn of avoidable economic pain and market dislocations.
  • Example: Vance: “waiting risks a far more painful downturn and unnecessary job losses.”
• Chair transition as amplifying both risks: The May 2026 Chair change increases political/reputational cost of either error; several panelists flagged this as likely to make the Fed more conservative around cuts in the immediate aftermath.

Summary of divergent scenarios articulated by the panel

• Zero cuts (no easing): Evelyn Thorne’s baseline—stay at 5.25–5.50% through December 2026—anchored on inflation-first credibility and unwillingness to ease until Core PCE is firmly at 2%.
• One-to-two cuts (conditional H2 easing): Lena Fischer and Jax Sterling’s baselines—two cuts to 4.75–5.00% by year-end—driven respectively by global disinflation (Fischer) and market/liquidity dynamics (Sterling). Fischer was willing to delay if domestic inflation re-accelerated; Sterling viewed market stress as the decisive driver.
• Three cuts (aggressive easing): Dr. Elias Vance’s baseline—three cuts at March/July/November to 4.50–4.75%—driven by a view that rising unemployment and structural disinflation justify a quicker normalization toward lower rates.

Final synthesis of moderator-observed patterns (no prescriptions)

• The panel splits into two coherent belief systems: (A) inflation-first, credibility-focused policymakers (Thorne, Reed), and (B) employment/market-stability pragmatists (Vance, Sterling), with a conditional international-influence view (Fischer) located between them. Each camp articulates concrete thresholds and calendars that make their forecasts falsifiable.
• Leadership transition (May 2026) and market microstructure (credit/volatility-induced tightening) emerged as pivotal non-traditional signposts that interact with headline data (Core PCE, unemployment) to determine the Fed’s likely path.
• Fischer’s conditional shift in the face of the stress scenario is the only explicit intra-session movement, illustrating that domestically-driven credibility concerns can override a global-disinflation baseline.
• The exact treatment of a 4.5% unemployment print is a flashpoint: depending on which lens the Fed adopts—employment stabilization vs. credibility protection—the policy path diverges sharply.

If any section above has no findings, it would have been noted; every section contains concrete examples and direct quotes from named participants to illustrate the emerging patterns and tensions discussed by the panel.