Earlier this month, the Federal Open Market Committee (FOMC) decided to maintain the target federal funds rate of 5.25% to 5.5% unchanged. During the meeting, officials lowered the number of expected rate cuts this year from three to one. Due to the inflation data that exceeded expectations at the beginning of the year, officials have become cautious about the expectation of rate cuts and are more uncertain about when the Fed will be able to achieve the 2% inflation target. Although some recent inflation data show that price pressures have eased, policymakers have been cautious in predicting the timing of rate cuts given the previous volatility.
Although the market generally expects that a rate cut may be made in September. However, in a speech earlier on Tuesday, Fed Governor Michelle Bowman said that she believes that a rate cut is unlikely this year. She emphasized: "The current uncertainty in the economic outlook and what the data shows indicate that we are in a good position to observe further developments." At the same time, some Fed officials also mentioned that the situation in the labor market has become increasingly important in their policy decisions, and any unexpected weakness in the job market may prompt them to reduce short-term borrowing costs. (Strategy Bamboo Leaf)
