#Balkin: Rate cut expectations weaken#

Federal Reserve Governor Barkin recently delivered a speech expressing caution about expectations of interest rate declines. He said that there is a growing recognition that long-term interest rates may not fall as sharply as previously hoped. While he is optimistic about the economic outlook for 2025 and expects the upside for growth to outweigh the downside, he believes that inflation has not yet returned to the Fed's 2% target, so the Fed still needs to take steps to control inflation, but not as restrictive as before. Barkin's remarks suggest that the Fed may not ease monetary policy soon, which will have some impact on market expectations. He believes that consumer spending growth momentum is likely to keep the economy growing healthily in the coming months, business sentiment is high, and the labor market balance is more likely to shift towards hiring rather than layoffs, all of which will be beneficial to economic growth. But he also pointed out that consumers are more cost-conscious, which will put pressure on businesses to limit price increases, which will help to keep inflation down. Overall, Barkin is cautiously optimistic about the economic outlook, but he also emphasizes the importance of controlling inflation, which suggests that the Fed will remain vigilant for some time to come and will not easily ease monetary policy.