Markets are pricing a quite dovish monetary policy stance, with rate cuts starting in March 2024 and a rate pause in December 2024. The 4% neutral rate in the long run is no longer priced in the SOFR market; the neutral rate in the long run is in the 3.75%/4% range but not exactly at 4%.

In comparison with FOMC officials' projections [ stlouisfed.shinyapps.io… ], there is a drastic difference between what they've projected in the Summary of Economic Projections (SEP) [ federalreserve.gov/mone… ] and what markets are pricing in the SOFR market.

The next two images illustrate the previous mentioned data.