Deutsche Bank-Fed Watcher Fed in wait and see mode ahead of looming tarif...

2025 20:50:07 GMT2025 20:50:07 GMTResearchDeutsche Bankamy.yang@db.comAmy Yang | (+1) 212 250 9959 | amy.yang@db.comJune 09, 2025IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Fed Watcher: Fed in wait and see mode ahead of looming tariff effectsDeutsche BankResearchAmy YangEconomist(+1) 212 250 9959 | amy.yang@db.comMatthew LuzzettiChief US Economist(+1) 212 250 6161 | matthew.luzzetti@db.comBrett RyanSenior Economist(+1) 212 250 6294 | brett.ryan@db.comJustin WeidnerEconomist(+1) 212 469 1679 | justin-s.weidner@db.com Avik ChattopadhyayResearch Associateavik-a.chattopadhyay@db.comJune 09, 2025ResearchDeutsche Bankamy.yang@db.comAmy Yang | (+1) 212 250 9959 | amy.yang@db.comJune 09, 2025DB Fed Watcher: Fed in wait and see mode ahead of looming tariff effects2Fedspeak Who**TakeawaysBias*FOMC Minutes (05/28)▪ Almost all participants commented on the risk that inflation could prove to be more persistent than expected▪ Policy well-positioned, wait for clarity▪ Potentially difficult trade-offs ahead▪ ‘Cautious approach’ amid ‘unusually elevated’ uncertainty▪ Tariffs much larger, broader than expected. Risks of higher inflation and unemployment have risen; long-term inflation expectations moved up▪ Saw “diminished benefits” with FAIT amid high inflation, while FIT could be a more robust strategyWilliams [2] (05/27)▪ ‘Relatively strong response’ when inflation deviates from target▪ Want the whole inflation expectations curve “well behaved”▪ Wait and watchWaller [1] (06/01)▪ Base case is in between large and smaller tariff scenarios. See risks of large tariff down, support rate cut in late 2025 if small tariff materialized▪ Saw average tariff rate @15%▪ Tariff-driven inflation will not persistCook [2] (06/03)▪ Price stability essential for strong labor market. ‘Open to all’ possibilities regarding rates▪ Monetary policy well positioned▪ Challenging situation with mandate tensionFedspeak, continuedWho**TakeawaysBias*Goolsbee [1] (05/29,06/02,03)▪ Rate cuts over 12-18 months▪ Little tariff impact on data so far; wait and see. Hesitant to conclude tariff inflation impact will be transitoryDaly [3] (05/29,30)▪ Cautious optimism; policy in good place, labor market ‘solid’▪ Comfortable with 2 rate cuts in 2025Logan [4] (05/29,06/02,03)▪ Tariffs can push up inflation at least temporarily, unemployment too▪ Policy well positioned, wait and be patient. Risks are balanced on dual mandates▪ Missing on either side of the mandate would be costly▪ Framework should work in a range of scenarios Bostic [3] (06/03)▪ Wants a lot more progress on infl.▪ Still see scope for one cut in 2025▪ Economy broadly healthy; no rush on adjusting policy stance, patient▪ Core PCE still an issue, ‘ways to go’▪ Potential weakness in labor market▪ No clear signs of tariffs boosting inflation as of April 2025Kashkari [4] (06/04)▪ Some s