A key variable in the next leg in markets is how the Federal Reserve reacts to all this. I’ve seen some research today showing this will push US inflation to 5% and that’s a big headache for Powell.
The market is pricing in a very high likelihood of a rate cut in June and about 104 bps in easing by this time next year. That all assumes the Fed looks through tariffs but some Fed officials aren’t on board with that thinking.
Powell is scheduled to speak at 11:25 am ET on Friday.
This article was written by Adam Button at www.forexlive.com.
