Fed rate path mixed: post-cut hold/hike risks amid oil/inflation
Key Questions
What risks are Fed officials highlighting for the rate path after recent cuts?
Officials like Hammack, Goolsbee, and Williams are floating risks of rate hikes due to stubborn inflation, Iran-related gas prices, energy shocks, tariffs, and labor market pressures. They note PCE at 2.8% and core at 3%, with stalled progress amid geopolitical risks.
Why is Nomura predicting later Fed rate cuts?
Nomura calls for delaying cuts to September-December 2026 due to persistent inflation pressures from oil prices and other factors, as highlighted in their analysis amid hawkish FOMC signals.
What do recent NY Fed surveys indicate about inflation expectations?
The NY Fed survey shows short-term inflation expectations at 3.4% and longer-term at 3.1%, reflecting heightened concerns from energy prices and economic data.
What are the forecasts for February PCE inflation?
February PCE is forecasted at core 3.0%, with overall PCE around 2.8-3.0%, indicating inflation remains above the Fed's target and progress has stalled.
What do major banks like Citi, GS, and JPM predict for Fed rate cuts?
Nomura, Citi, Goldman Sachs, and JPMorgan are delaying their rate cut forecasts to September-December 2026, citing hawkish FOMC minutes and persistent inflation risks.
How hawkish were the March FOMC minutes released on April 8?
The minutes were described as hawkish, expecting core PCE at 2.7% with geopolitical risks, contributing to expectations of holding rates steady.
What is the probability of the Fed holding rates at the April FOMC meeting?
Markets price in a 99.5% probability of holding rates at the April FOMC, amid post-cut caution on inflation and oil shocks.
What factors are contributing to the mixed Fed rate outlook?
Mixed signals include stubborn core inflation at 3%, energy and tariff pressures, labor data, and surveys showing elevated expectations, balanced against some brokerages still forecasting two cuts in 2026.
Officials float hikes stubborn infl/Iran gas (Hammack/Goolsbee/Williams); Goolsbee/Jefferson speeches PCE2.8/core3 stalled energy/tariffs/labor cautious; NY Fed survey3.4%/3.1%, Feb PCE core fcast3.0%; Nomura/Citi/GS/JPM delay cuts Sep-Dec'26; Apr8 Mar FOMC minutes hawkish exp (Core PCE2.7%, geo risks); Apr FOMC99.5% hold.