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Fed Whisperer: Today's CPI Report Will Not Change Fed's Policy Direction
Summary: In a recent article, the 'Fed Whisperer' Nick Timiraos stated that the inflation data for June may prompt Fed officials to remain cautious. Those who predicted that tariffs would lead to more significant price pressures later this year may not have much reason to change their views after seeing the June data, especially if retailers ...
In a recent article, the 'Fed Whisperer' Nick Timiraos stated that the inflation data for June may prompt Fed officials to remain cautious. Those who predicted that tariffs would lead to more significant price pressures later this year may not have much reason to change their views after seeing the June data, especially if retailers delay price adjustments as much as possible. The June data will only make the upcoming July and August data more important. Similarly, policymakers who believe tariffs will not lead to significant inflation (due to insufficient pricing power by businesses to support inflation) have almost no reason to change their views after Tuesday's report. In recent weeks, Fed Chair Powell has indicated that the threshold for cutting interest rates may have slightly decreased compared to the spring. This shift reflects an assessment that inflation risks may take longer to materialize, and therefore their impact may be relatively weaker. If the Fed maintains the expectation that inflation acceleration will not be too severe, Powell may open the door for rate cuts as early as September based on softening labor market conditions or improving inflation data.
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Link: Fed Whisperer: Today's CPI Report Will Not Change Fed's Policy Direction [Copy]
