#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 upside risks to economic growth to outweigh downside risks, 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, but not as restrictive as before. Barkin believes that continued momentum in consumer spending will keep the economy growing healthily, business sentiment is high, and the labor market balance is more likely to shift towards hiring rather than layoffs. Consumer concern about costs will also put pressure on businesses to limit price increases, further dampening inflation. Overall, Barkin's speech suggests that the Fed has become less optimistic about interest rate declines, but remains optimistic about the economic outlook and expects to take more moderate monetary policy measures in the future.