Market anticipates modest easing by the US Fed due to inflation and fiscal constraints.
Summary
The article discusses the market's reaction to expectations of a dovish shift in the US Federal Reserve's policy. Despite anticipations of easing, markets suggest only moderate changes due to elevated inflation, prior rate cuts, and fiscal expansion limiting the Fed's flexibility. A split Federal Open Market Committee (FOMC) further reduces the likelihood of aggressive monetary accommodation.
Key Points
- Financial analysts anticipate a dovish turn by the US Federal Reserve.
- Markets indicate only modest easing ahead.
- Elevated inflation is a key factor influencing the Fed's policy.
- Fiscal expansion limits the flexibility of the Fed.
- A split FOMC with hawkish voters reduces the scope for deeper monetary accommodation.
Full Article
Financial analysts expect a dovish Fed leader aligned with Trump, yet markets imply only modest easing ahead. With inflation elevated, prior rate cuts largely priced in, and fiscal expansion limiting flexibility, aggressive policy shifts look unlikely. A split FOMC with hawkish voters further reduces the scope for deeper monetary accommodation.