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Cryptocurrency markets did not increase following inflation data, and Powell appeared untroubled during his Friday remarks. Despite calls from Trump to lower interest rates gaining no traction, a Fed member suggested, “let’s not kid ourselves” while discussing economic conditions.
Fed Statements
While this article was being prepared, Fed member Schmid was making statements. He shared his evaluations on various topics, including inflation and tariffs, stating that he would continue to focus on inflation. He implied that the assumption of tariffs having only temporary effects seems misleading, emphasizing critical points in his statements:
“The likelihood of the Fed having to balance inflation risks against growth and employment is increasing. Compared to the beginning of the year, there’s a noticeable rise in higher inflation and risks of lower employment and growth.
Announcements regarding tariffs have increased economic uncertainty, coinciding with a period of decreasing sensitivity and rising short-term inflation expectations. The increasing supply of U.S. Treasury bonds combined with potentially waning demand paves the way for higher interest rates in the long term.
Given the previous high inflation, I am concerned that further increases could drive inflation expectations higher. I intend to continue focusing on inflation; I do not rely too much on the theory that tariffs may only have a temporary effect on inflation. The U.S. enters a challenging period from a strong position, with a robust labor market.”
Market expectations for the upcoming Fed meeting in 27 days indicate that interest rates will likely remain unchanged. The earliest anticipated rate cut is expected in June. However, total annual interest rate cut expectations have slightly diminished.
