#Balkin: Rate cut expectations weaken#

Federal Reserve Governor Barkin recently gave a speech in which he adjusted his expectations for interest rate declines. He said that he is increasingly recognizing that long-term interest rates may not fall as sharply as he had hoped. While he is optimistic about the economic outlook for 2025 and expects the upside for economic growth to be greater than the downside, he believes that inflation has not yet returned to the Fed's 2% target, so the Fed still has work to do. Barkin noted that the recent rebound in business optimism may be due to expectations of economic expansion, and that growth in consumer spending could keep the economy growing healthily in the coming months. He believes that the current labor market balance is more likely to shift towards hiring rather than layoffs, and that consumers' focus on costs will put pressure on businesses to limit price increases, which should continue to dampen inflation. However, Barkin also emphasized that the Fed does not need to take as restrictive measures to control inflation as it did in the past. Overall, Barkin's speech suggests that the Fed is cautiously optimistic about the economic outlook, but has adjusted its expectations for interest rate declines, and will continue to monitor inflation going forward.