- It takes some time to see goods inflation from tariffs move onto the consumer
- Many, many companies do expect to put 'some or all' effects of tariffs onto the consumer
- People generally expect inflation to move up and then come back down but can't assume that
- Uncertainty peaked in April and has come down
- You can make a case for any of the rate paths you see in the SEP
- No one holds rate path projections with a great deal of conviction
- As we get more data, the differences in forecasts will be smaller
- We expect a meaningful amount of inflation in the next few months
- The economy is still solid so we can take the time to see what will happen
- We will make smarter decisions if we wait a couple of months or however long it's going to take
- Labor supply is diminishing because of lower immigration, demand is also falling and that's kept unemployment reasonably stable
- People are working their way through tariffs, it feels much more positive and constructive
The market wanted to hear something more dovish and the US dollar is rallying on the sense that the Fed is in no rush to cut rates, and might not cut at all.
The bolded line was the one that hit the hardest.
