Allison Boxer
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April’s U.S. inflation report likely offers some comfort to Federal Reserve officials, but rate cuts are unlikely until we see a more substantial deceleration in inflation.
The Fed: Stuck On Hold for Now
Despite the reacceleration of inflation and enduring labor market strength, the Fed remains focused on downside risks.
Federal Reserve officials appear locked in for multiple rate cuts this year, despite inflation reaccelerating – raising questions about the speed and timing of this easing cycle.
Fed Slowly Building the Confidence to Cut
The Federal Reserve sees progress on inflation, but wants more certainty before it’s prepared to lower the policy rate.
The market anticipates a swift shift in the Fed cycle.
U.S. inflation cooled more than expected, and bond markets rallied, but the Fed is likely to remain in a long pause.
Tighter financial conditions prompted Federal Reserve officials to take a step back from data dependence, and suggest a higher bar for future hikes.
Inflation Headache Remains for the Fed
The latest inflation report raises the odds of further Federal Reserve action.
The Federal Reserve forecasts only a modest uptick in U.S. unemployment next year as inflation cools, but history and current labor market trends make us less certain.