Fed Chair Jerome Powell\u2019s comments reassured markets, countering concerns that policymakers might take a harsher stance.<\/p>\n
A major factor in the Fed\u2019s outlook is its expectation that tariff-driven inflation will be short-lived. Officials project inflation will rise to 2.7% by year-end before cooling to 2% by 2027. However, some analysts warn that shifting trade policies could derail these forecasts. Powell acknowledged the uncertainty, stressing that more data is needed before adjusting expectations.<\/p>\n
Despite the Fed\u2019s cautious approach, markets priced in the possibility of three rate cuts instead of two. Some experts remain skeptical, pointing out that recent inflation trends, particularly tariffs, could complicate the path forward. Others argue that rate cuts driven by economic weakness would be concerning rather than encouraging.<\/p>\n