- Outlook is not for recession but slipping confidence, higher prices, below to household wealth point to slowing growth
- Do not see market dysfunction in recent volatility
- Financial conditions have tightened
- Tension between Fed’s dual mandate begin to materialize
- Inflation expectations well anchored, necessary to keep them that way
- Risky to assume the Fed can look through higher prices from tariffs, there is a chance some effects could persist
- Will take a balanced approach to mon pol as long as inflation expectations remain well anchored
- Business contacts are not turning to layoffs, but are taking a wait-and-see approach to hiring and capex
There is going to have to be a big pivot in Fed comments if we are going to get the 76 bps in easing priced in through September.
This article was written by Adam Button at www.forexlive.com.
