Fed Awaits Clarity Amid Rising Risks, June Rate Cut Unlikely

According to BlockBeats, the Swedish bank Nordea has highlighted that the Federal Reserve is seeking more clarity as risks increase. Both trade policy and economic outlook are considered highly uncertain, prompting the Fed to wait for clearer outcomes. The market interprets this stance as slightly hawkish, reducing the likelihood of a rate cut at the June meeting. While Nordea agrees with this market shift, it anticipates that the Fed will eventually prioritize supporting economic growth over addressing temporary inflation spikes. If long-term inflation expectations remain manageable and aligned with targets, the Fed should be able to overlook the temporary inflation impact caused by tariffs. There is also a possibility that the short-term economic impact of tariff uncertainty could exceed current expectations. However, for now, the Fed perceives limited economic impact from these measures, with some signs of progress in trade negotiations. Inflation remains above target and is expected to rise again due to tariffs.