- Tariffs if implemented pose upside risks to inflation but doesn't know if that's months, quarters or years
- Higher inflation and a softer labor market is closer to the baseline scenario now
- If inflation expectations become unanchored, have to prioritize fighting inflation
- Uncertainty on tariff announcements also a headwind
The Fed funds market is 93% priced for a June cut and 92 bps are priced in for the year ahead.
