Fed Balancing Act: Powell Could Signal Rate Cut to Ease Inflation Fears While Tamping Down Market Expectations

Powell may signal a near-term rate cut in a surprise, but also pull back 2024/2025 projections. A balancing act for the Fed.

The initial rate cut carries significance, potentially sending an all-clear on inflation.

Since December, data has come in hotter than expected, complicating the Fed's rate cut calculus.

Markets see high odds of 3+ cuts in 2023, but Fed may be reluctant to fuel market exuberance.

The economy could weaken enough for 5 cuts or stay strong with none. Fed aims to tread carefully amid uncertainty.