Most of the events we anticipated in last year’s Outlook, including four interest rate hikes, an equity market correction and a partial yield curve inversion, have come to pass. Waning support from tax cuts and concerns about a late-cycle combination of rising inflation, tightening policy, and slower growth have caused significant stock market valuation adjustments and put the U.S. Federal Reserve’s hawkish stance in place since 2015 on the defensive. Consequently, risk of a policy mistake in 2019 is now relatively low; neither normalization of interest rates nor the pace of its balance sheet unwind will continue on autopilot. We expect at most one additional hike in 2019 before the Fed pauses for what could be an extended period. Accordingly, moderate expansion will continue this year, albeit at a slower pace.