Analysis: The Fed's hawkish shift compresses the rate cut space for Waller
According to Jinshi News, analyst Eamonn Sheridan pointed out that the minutes from the Federal Reserve's April meeting show a clear change in its stance, emphasizing that the previous wording of responding "flexibly and swiftly" based on economic data has been replaced by new phrasing. Persistently high inflation and the uncertainty of the conflict in Iran may mean that the policy needs to remain on hold for a longer period.
The inflation situation faced by Waller is complex, with officials noting that high fuel costs are being passed on to areas such as shipping rates and airfare prices, spreading inflationary pressures. The market expects that if inflation does not decline, the Federal Reserve may raise interest rates again by the end of 2026 or early 2027.
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