TechFlow news, May 9 — According to Jinshi Data, SEB (Skandinaviska Enskilda Banken) of Sweden noted that as risks rise, the Federal Reserve is waiting for greater clarity. Both trade policy and the economic outlook are seen as highly uncertain, and the Fed wants to wait for clearer outcomes. The market interpreted this message as slightly hawkish, further reducing the likelihood of a rate cut at the June meeting. We agree with this market shift, but expect the Fed will ultimately focus on supporting economic growth and look through temporary increases in inflation. If longer-term inflation expectations remain well-contained and aligned with the inflation target, the Fed should be able to ignore transient inflation shocks caused by tariffs. There is also a possibility that the short-term impact of tariff uncertainty on the economy will exceed current expectations. But for now, the Fed views the economic impact as limited, and there are some signs of progress in trade negotiations. Inflation remains above target and, due to tariffs, is expected to start rising again.
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