According to Jinshi Data, the Swedish Nordea Bank pointed out that the Federal Reserve waits for more clarity when risks rise. Trade policies and economic prospects are seen as uncertain, and the Federal Reserve hopes to see clearer outcomes.
The market interprets this as slightly hawkish, reducing the likelihood of a rate cut at the June meeting. The Federal Reserve is expected to focus on supporting economic growth while overlooking the temporary rise in inflation.
If long-term inflation expectations are controllable and aligned with targets, the Federal Reserve can overlook the temporary inflationary shocks caused by tariffs. Tariff uncertainty may have a more significant short-term impact on the economy than expected, but the current impact is limited, and there are signs of progress in trade negotiations.