Overview

• The Fed lowered the federal funds target to 4.00–4.25% with a 25 basis point cut last week after hiring slowed and unemployment edged to about 4.3%.
• Powell said near-term inflation risks tilt higher while employment risks tilt lower, favoring a moderately restrictive stance, and he estimated tariffs have added roughly 0.3–0.4 percentage points to PCE inflation.
• Policy splits widened as Stephen Miran and Michelle Bowman called for faster, larger reductions, while Chicago Fed President Austan Goolsbee urged a slower approach with inflation still above 2%.
• The OECD projected room for roughly three additional cuts, seeing the policy rate at 3.25–3.50% by spring as growth cools and labor indicators weaken, and it warned to safeguard the Fed’s independence.
• Spillovers are building, with BNP Paribas economist Pamela Díaz saying conditions favor a 25 basis point Banco de México trim to 7.5% on Thursday following a softer inflation surprise.