Review | And Now We Wait

Sustained risk-asset weakness and recession fears may have spurred hopes for a helping hand from the Fed, but the central bank is likely to disappoint those looking for any commitment to near-term easing. Notwithstanding the possibillty of stagnant growth and labor market disruption, above-target inflation has persisted and threatens another march higher as tariffs enter the fray. Federal Reserve officials have continued to emphasize their intention to remain patient on the sidelines while policy plays out in Washington and abroad, and they do not see a need to let up their restrictive stance. The Fed is unlikley to forgo any future flexibility at the March 18-19 FOMC, when the federal funds target range is widely expected to be held at 4.25-4.50%. Near-term rate cuts may not (yet) be in the cards, but look for any changes to forward guidance or hints in the SEP for anticipated turbulence.