Fed: Longer hold before gradual easing – ABN AMRO
ABN AMRO notes the Fed kept rates at 3.50–3.75% in April and signalled no consensus to ease until tariff-driven goods inflation moderates. With the Oil shock lifting headline inflation, the bank expects the Fed to stay on hold until December to assess second-round effects.

ABN AMRO notes the Fed kept rates at 3.50–3.75% in April and signalled no consensus to ease until tariff-driven goods inflation moderates. With the Oil shock lifting headline inflation, the bank expects the Fed to stay on hold until December to assess second-round effects. Thereafter, it sees quarterly 25 bps cuts, taking rates to 2.75–3.00% by June next year.

Higher-for-longer then steady cuts

"With the added impact of the oil shock on energy and headline inflation, we expect the Fed to remain on hold for longer than previously anticipated, waiting until December to convince themselves of limited second round effects."

"We then see a dovish Fed gradually easing, despite elevated headline, and elevated core inflation, with quarterly 25bps cuts to end up at 2.75-3.00% by the June of next year, the lower end of neutral estimates."

"The Fed held rates at the 3.50-3.75% target range in the April meeting."

"They signalled that the FOMC saw no consensus to ease before goods (i.e. tariff) inflation starts to abate."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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