#Balkin: Rate cut expectations weaken#

Federal Reserve Governor Barkin recently delivered a speech expressing optimism about the U.S. economic outlook, arguing that the upside potential for economic growth in 2025 outweighs the downside risks. He expects consumer spending growth to continue supporting healthy economic growth, with businesses exhibiting high levels of optimism and the labor market balance more likely to shift towards hiring rather than layoffs. Additionally, he believes that consumers' focus on costs will put pressure on businesses to limit price increases, thereby continuing to dampen inflation. Despite this optimism, Barkin acknowledged that inflation has not yet returned to the Fed's 2% target and that continued efforts are needed, though not necessarily the same restrictive measures as before. However, Barkin also indicated a growing recognition that long-term interest rates may not decline as significantly as previously hoped. This suggests that while optimistic about the economic outlook, the Fed remains focused on inflation and interest rate issues, and future monetary policy decisions will need to be adjusted based on economic data and inflation developments.