Milan's Super-Hawk Expectations Hint at How the Federal Reserve Will Operate After Powell Leaves

MetaEraSep 18, 2025
#Macro
On September 18 (UTC+8), Fed Governor Michelle Bowman hinted that the federal funds rate needs to be cut by another 1.25 percentage points at the next two meetings. He may not get his wish, but drawing such a modest line in the sand should send a strong signal to the market as to how the Fed will operate when Powell is replaced by a Trump-appointed chairman next year. Given that the current Fed has shifted to supporting the labor market rather than fighting inflation, this could create a long-term risk that is not reflected in current market pricing. "Given the personnel changes at the Fed next year, we urge everyone to be cautious about (Wednesday's economic forecasts)," said Joe Brusuelas, RSM chief and chief economist. "The Fed is moving in a direction that tolerates inflation far above its target." [Jin10]
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Milan's Super-Hawk Expectations Hint at How the Federal Reserve Will Operate After Powell Leaves

MetaEraSep 18, 2025
#Macro
On September 18 (UTC+8), Fed Governor Michelle Bowman hinted that the federal funds rate needs to be cut by another 1.25 percentage points at the next two meetings. He may not get his wish, but drawing such a modest line in the sand should send a strong signal to the market as to how the Fed will operate when Powell is replaced by a Trump-appointed chairman next year. Given that the current Fed has shifted to supporting the labor market rather than fighting inflation, this could create a long-term risk that is not reflected in current market pricing. "Given the personnel changes at the Fed next year, we urge everyone to be cautious about (Wednesday's economic forecasts)," said Joe Brusuelas, RSM chief and chief economist. "The Fed is moving in a direction that tolerates inflation far above its target." [Jin10]
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