- Inflation is running above target and trending higher
- Rate cut was insurance against more rapid, non-linear decline in labor market
- Demand remains pretty resilient
- See risks on both side of the Fed's mandate
- Payroll gains have declined markedly
- Labor market looks fairly balanced, only gradually slowing
- We need to be very cautious about rate cuts
- Must not ease too much, only to have to reverse course
This is a real pushback against the 100 bps in easing that's priced into the curve.
