Federal Reserve: Trimmed inflation guides rate outlook – Rabobank
Source Fxstreet
RaboResearch Global Economics & Markets discusses how the Federal Reserve’s new task force on inflation frameworks under Chair Warsh may elevate trimmed inflation in policy decisions. The report argues that, despite higher energy prices, trimmed inflation’s stability since the war could justify further rate cuts, aligning with President Trump’s rate preferences, while warning that trimmed measures can also imply hawkishness and slow Fed reactions.
Fed focus shifts to trimmed inflation
"With the Fed’s new task force on inflation frameworks – announced at Warsh’s first press conference as Fed Chair – we could see trimmed inflation measures gain increased prominence in monetary policy decision-making."
"In the current circumstances, despite a sharp rise in energy prices, trimmed inflation – which has barely moved since the outbreak of the war – could actually support additional rate cuts rather than a hike."
"This is where Warsh’s preferred measure of inflation aligns with President Trump’s preferences for rate policy."
"However, trimmed inflation is not inherently dovish."
"By discarding extremely inflationary items, trimmed inflation suppresses not only noise but also signals."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
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