As the upcoming FOMC Day approaches, tensions rise between President Trump, who urges a 100bps rate cut, and the FOMC, which remains in a wait-and-see stance due to uncertainties surrounding tariff policies. Current data shows a 97% implied probability for the Fed to pause on rate cuts, suggesting that immediate action is not anticipated. The upcoming dot plot meeting will offer insights into the Fed's economic projections and potential dovish signals. A surge in continuing jobless claims indicates labor market strain, although layoffs have not yet increased significantly. Meanwhile, inflation concerns persist, especially in light of tariff impacts, despite recent Core CPI data showing a considerable downside miss. The Fed has demonstrated caution in responding to inflationary pressures, fearing a repeat of previous policy errors. The situation reflects a precarious balance, where delaying policy decisions may risk falling behind economic indicators, ultimately posing a significant risk of policy error.

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