The Fed has switched to stagflation mode and is still waiting for higher customs rates in the economy. At least in this way, a new quarterly macroeconomic prognosis, which assumes higher inflation, lower growth and slightly higher unemployment, can be understood. At the same time, the estimated trajectory of interest rates sends a slightly hawk signal, since in the predicted outlook, one rate reduction (by 25 basis points) in 2026 was deleted. This year (the median remained on two 25 bps reductions).
I also had a light hawk also a press conference of Fed chief J. Powell. He said that he believes that the (not yet existent) pro -inflationary effect of higher cells in the prices of goods will manifest, and at the same time described the labor market as healthy, where nothing is problematic. This is a relatively bold statement, especially if we look at the latest development of weekly applications for support. Powell, as usual – referred to a high degree of uncertainty, which is mainly due to unprecedented changes in business (read customs) policy. So read outputs from the last session, especially in relation to the outlook of official interest rates in the US? Everything suggests that the Fed has been ignored by the last low inflation numbers for the time being, and it is not worried about mixed signals from the labor market. So it certainly does not look like an early reduction in interest rates in the near future, and it will probably be two to three months to wait whether and how significantly the higher duties in the economy will manifest. At the same time, it does not seem that one bad monthly number from the labor market forces the US central bank to immediate release of monetary policy. Needless to say, the stagflation view and the hawk of the Fed will not like the White House. The question is how the markets of assets – especially the risk.
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