- Leans towards more cuts in 2026, hard to say if it's one or two
- Says she keeps an open mind on rates
- To cut, you'd need to be more confident on inflation or see labor market as more challenged that currently
- Workers feel they are on the knife's edge
- If job market goes from 'no firing' to 'some firing' Fed may need to cut
- She sees more vulnerability on jobs market than inflation
- Would be comfortable holding for longer if inflation picks up
The market is pricing in an 18% chance of a cut in March and one cut is fully priced in (barely) for the June 17 meeting, which will be Chaired by Kevin Warsh if he's confirmed in time. For the year, pricing is up to 57 bps from 48 bps at the start of the week in light of soft employment data. Next week we get non-farm payrolls.
