#Balkin: Rate cut expectations weaken#

Federal Reserve Governor Barkin recently gave a speech in which he adjusted expectations for interest rate declines. He said that he is increasingly recognizing 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 more upside than downside to growth, he also noted that inflation has not yet returned to the Fed's 2% target, so the Fed still needs to take steps to control inflation. Barkin believes that the current labor market balance is more likely to shift towards hiring rather than layoffs, and that consumers' focus on costs will put pressure on businesses to limit price increases, which will help to dampen inflation. However, he stressed that while the Fed does not need to be as restrictive as it was before, it still needs to continue working to control inflation. Barkin's comments suggest that the Fed's expectations for interest rate declines are weakening, and that more action may be needed to control inflation in the future, which will have an impact on the market.