Insight
Macro Matters: Is the Fed Too Cautious?
Summer Edition
Macro Matters provides a concise, comprehensive look at macroeconomic themes that matter to clients.
Key takeaways
- Mixed growth data in the U.S. and internationally are an advantage for central banks. Weakening growth could contribute toward controlling inflation.
- Inflation’s momentum is pointing downward again. U.S. inflation seems to have begun turning lower now, and in the eurozone and the U.K., we expect it to decline further.
- Monetary policy divergence will continue for now. With weaker growth and inflation relative to the U.S., international markets have already cut interest rates while the U.S. has remained on hold.
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Fed officials again kept the federal funds rate unchanged at 5.25–5.50%. Our base case is that they won’t cut rates until they see weakening in prices and the labor market, probably not before fall.