he Fed is in a very difficult position. They are dealing with an economy that is facing both a negative growth shock and an inflationary shock at the same time, and are equipped only with the blunt tool of monetary policy.
The uncertainty over tariffs put inflation targeting’s weakness on display.
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The Fed faces risk from multiple directions and is experiencing a high level of uncertainty. Our baseline scenario sees the hawks mostly unchanged and the doves to consolidate towards two cuts for 2025.
