Despite improved inflation data, market expectations for rate cuts remain high, influenced by recent trends such as cooling rent growth and falling oil prices. The Fed's shift in inflation targets, driven by trade war pressures and potential goods shortages, complicates the outlook. A key concern is whether Powell will pivot towards prioritizing labor market stability over inflation. Recent comments from Fed presidents indicate a growing focus on labor market health, suggesting readiness for rate cuts if jobless claims rise, marking a potential shift in Fed policy dynamics.
The markets anticipate potential rate cuts despite improved inflation data, influenced by recent labor market pressures and the effects of ongoing trade conflicts.
Monitoring whether Powell addresses further rate cuts amid labor market strain is crucial, as recent events may not yet reflect their full impact.
The Fed is poised to signal a shift from Powell's stance, focusing on the labor market over inflation concerns stemming from tariffs.
Fed President Waller is ready for aggressive rate cuts if the labor market declines; increasing divergence in priorities among Fed presidents could widen.
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