The Fed Is Waiting Until the Whites of Recession’s Eyes
Jerome Powell, chairman of the US Federal Reserve, has said the Federal Reserve simply isn’t confident yet that inflation has been tamed. Tariffs keep the Fed on hold, though they do forecast two rate cuts later this year.
Photographer: Al Drago/BloombergThis was one of the more challenging Federal Reserve decisions to anticipate. US macro data has deteriorated so much that, normally, you’d expect policymakers to cut interest rates. However, they’ve already said tariffs are keeping them on hold for a while, unless things really fall apart. Military conflict between Iran and Israel can only make that hold longer.
Therefore, it was anyone’s guess what the Fed’s dot plot of interest rate projections would show. So I’m going to take a slightly different tack by mostly ignoring those forecasts and, instead, tell you what I’m seeing in the data, how I think the Fed will act and what that means for asset prices.