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Two Fed rate cuts are possible, but hinge on inflation and jobs Economists broadly see room for two federal reserve rate cuts this year, but only if inflation keeps cooling and labor data soften. The outlook remains conditional and data‑dependent. as reported by Reuters, many forecasters have penciled in two moves while cautioning that renewed price pressures or resilient hiring could delay action. That framing now anchors the policy debate. Why economists’ two-cut outlook matters for borrowers and markets For borrowers, easier policy over time can lower debt‑servicing costs, including mortgages and corporate credit. For markets, the path of rates shapes valuations, discount rates, and risk appetite across assets. Officials remain wary of overcommitting while price progress is uneven. That caution has been underscored in recent public remarks. “Uneasy about ‘front‑loading’ cuts and ‘moving prematurely,’” said Austan Goolsbee, President of the Chicago Fed. Because monetary policy works with lags, an early pivot can misread demand and wage dynamics. Markets therefore react to each incremental data print on prices and employment. Sticky inflation, when price growth resists decelerating, remains the binding constraint. according to Capital Economics, tariff‑driven inflation risk is elevated and could prevent easing if such pressures persist. As reported by the Associated Press, senior Fed officials have stressed that progress must be durable, with inflation clearly moving toward 2% before cuts are considered. One or two favorable prints are not enough. Labor indicators are equally pivotal. If hiring and wage gains stay firm, demand‑side pressure can offset the impulse from cuts, raising the risk of a policy wash‑out via higher prices or expectations. Policy lags further complicate timing. The real‑economy effects of past hikes and any future cuts unfold over quarters, so decisions today target conditions that may differ when policy transmits. Scenarios: easing path versus pause or wash-out…

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Filed under: News - @ March 13, 2026 12:22 pm