Few changes to the Federal Reserve's policy statement and median rate projections masked an important shift. With further progress on inflation delayed and considerable outlook uncertainty, the Fed is waiting to react to whatever conditions arise from the new administration's policies in whichever manner is appropriate. Both are undetermined and achieving clarity will take time. The Fed is well-aware of downside risks to growth and upside risks to inflation but eschewed devia

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 s

Summary

A streamlined FOMC statement that preserved maximal flexibility belied a substantive tonal shift - the Fed is on an indefinite hold. Barring unforeseen labor market weakness, another rate adjustment before June appears unlikely. Fed officials will wait to assess policy implementation as it concerns tariffs and immigration as well as fiscal and regulatory developments. These assessments will precede deliberations about whether sufficient progress on inflation (i.e., a series o

With greater confidence that inflation is moving sustainably lower and a willingness to preemptively support its employment goals, the...

The Fed has signaled that it will cut the Federal Funds target range 25bp (to 5.00-5.25%) on September 18 and initiate a monetary easing program. While nascent growth concerns could dovetail with excessive labor market cooling to motivate a larger initial reduction, more assertive forward guidance appears likely instead.