Economist: Fed Flying Blind Without Data, Rate Cuts Likely Amid Narrow Growth

Inflation and Fed Expectations

• 📊 Headline inflation is estimated at 3.1%, above the 2% target, but this is largely priced in for the upcoming Fed meeting.
• 🔍 Details within the inflation data, particularly concerning services inflation, are crucial, with expectations that it should be slowing.
• ⚠️ Concerns exist about tariffs passing on to higher goods prices, though this is not yet clearly evident in the data.

Labor Market and Economic Divide

• 📉 Workforce reductions are being observed across various companies and sectors, indicating a softening labor market.
• ⚖️ There's a divide among Fed officials, with some more concerned about labor market risks and others about persistent inflation.
• 💡 The prevailing strategy is to act based on the last known data, which suggested worsening labor market risks and less tariff pass-through than expected.

Fed's Data Dependency and Market Impact

• ❓ The Fed is described as