The Fed has raised the bar for rate cuts, and inflation expectations have been raised twice in a row

Odaily Planet Daily reported that Nick Timiraos, a mouthpiece for the Federal Reserve, wrote that the Federal Reserve's economic expectations have changed significantly, but interest rate expectations have not fully reflected this change, and the threshold for interest rate cuts is rising. Federal Reserve officials have raised their core PCE inflation expectations twice in a row, from 2.2% in September 2023 to 2.5% in December 2023, and then to 2.8% in March 2024 (forecast for the end of 2025). Some officials have even raised their inflation expectations for 2026 and 2027. In addition, 18 of 19 officials saw inflation risks as skewed to the upside, meaning the Fed would likely need to see a notable weakening in the labor market before considering a rate cut. Federal Reserve Chairman Powell said the upward revision in inflation expectations was driven "almost entirely" by changes in trade policy, and former Fed officials believed that it may be difficult for the Fed to ignore the upward price pressure caused by tariffs, and they may need to wait until more evidence of slowing economic growth emerges before taking action.