FOMC conference - Less members want cuts. EURUSD below 1.15

• Current monetary policy stance remains appropriate.

• Implications of the Middle East situation are uncertain.

• Inflation expectations have risen sharply, mainly due to rising oil prices.

• Inflation projections revised upward for the current year.

• Long-term inflation expectations remain consistent with reaching the 2% target within the forecast horizon.

• The Fed continues to remain in a mode of responding to inflation and labor market conditions.

• Previous rate cut decisions should support the labor market.

• Inflation likely to rise in the short term, but hard to predict in the long term.

• The Fed will decide meeting by meeting.

• Balanced statements from Powell. The Fed seems to remain in wait-and-see mode, at least until the end of Powell's current term.

• Inflation remains on a downward path, even despite the recent oil crisis (duration unknown).

• Previously, there were many signs in inflation that it was starting to fall (progress in limiting tariff impacts on product prices).

• If no progress in inflation decline is seen by mid-year, rate cuts will be hard to expect.

• Slightly fewer FOMC members now support a cut, but consensus still points to it. Dollar strengthening.

• Note that while consensus for a 2026 cut remains unchanged, fewer FOMC members now indicate it.

Source: Bloomberg Finance LP

• Oil shock may show in core inflation. If no inflation progress, no cuts.
• Slower tariff progress led to higher inflation forecasts.
• Partially higher forecasts due to elevated oil prices.
• Fed cannot fully assess how the oil shock will impact the economy.
• Oil shock could be partially or fully offset by increased domestic energy production (higher oil, gas extraction, etc.).
• Interest rates balance on the neutral-restrictive boundary.
• Key now to keep rates slightly restrictive but not overly so.
• Fed in a tough spot, balancing various risk factors.

Several somewhat hawkish comments led to sharper EURUSD drop below 1.150.

• Powell does not intend to leave his position while the DOJ investigation into irregularities continues.
• Powell has not yet decided whether to remain as a Fed governor after his term as chair ends. He will decide based on serving the American people and economy best.
• The labor market shows some signs of weakness, primarily in job creation. The balance of risks is negative.