Thoughts on the “Standing Pat” Fed

The Fed’s approach of “wait and see” is losing credibility and the financial markets are beginning to price securities based on growing expectations of an imminent Federal Reserve interest rate cut.

At his press conference after the Fed’s June meeting last week, Chairman Powell relayed that the economy was solid, and the Fed could be patient in easing interest rates. The chairman keeps repeating the Fed is “well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” His concern about potential inflationary fallout from tariffs is understandable since nobody yet knows how inflation will respond as tariffs work through the economy. Nonetheless, his continued assertion that economic growth remains solid appears less and less convincing.