The Fed Is In A 'Good Place' - But For How Long?

2025-05-08 01:20:00 ET

Summary

• Fed Chair Jerome Powell repeatedly emphasized the unclear economic outlook as the central bank’s rate-setting committee met for the first time since the 2 April tariff announcements.
• The Fed statement directly acknowledged that these trade policy changes have increased risks to both sides of its dual mandate: Tariffs are likely to weaken growth and spill over to the labor market, even as they raise prices.
• We believe the Fed will hold off on rate cuts until hard evidence of a slowdown appears in labor market reports – potentially not until late summer or fall.

Fed officials remain patient, likely awaiting hard evidence of a weaker U.S. labor market before considering rate cuts. ...

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