#Balkin: Rate cut expectations weaken#

Federal Reserve Governor Barkin recently delivered a speech expressing optimism about the U.S. economic outlook, predicting that the upside potential for economic growth in 2025 outweighs the downside risks. He believes that consumer spending growth will continue, business sentiment remains high, and the labor market balance will shift towards hiring rather than layoffs. Additionally, he expects that consumers' focus on costs will put pressure on businesses to limit price increases, thereby continuing to dampen inflation. Despite this, Barkin also noted that inflation has not yet returned to the Fed's 2% target and that further efforts are needed, but he believes that restrictive measures are not necessary to the same extent as before. Notably, Barkin also stated that there is growing recognition that long-term interest rates may not decline as sharply as previously hoped. This suggests that while he is optimistic about the economic outlook, he also acknowledges that expectations for interest rate declines have weakened, and future monetary policy may need to be more cautious.