Former Vice Chair if the US Federal Reserve, Richard Clarida, is now a global economic adviser to PIMCO. He wrote last week that even if inflation proves more sticky at high levels in the data to come over the weeks ahead, and the economy remains strong, the FOMC could still go ahead with a Fed Funds rate cut at the June meeting by framing it as a potentially one-off adjustment rather than the first in a locked-in cycle of rate reductions.

Fed policymakers could argue that a rate cut would be to keeping rates in step with the decline in inflation seen since last year. And that further cuts remain dependent on inflation continuing to fall. The but is:

  • If "inflation...does not follow the forecasts and becomes entrenched at a plausible 2.5%...the central banks would likely pause their rate cut cycles"

Sticky high inflation would mean "keeping policy restrictive long enough, they can credibly forecast inflation returning (eventually) to the 2% target."

There has been a subtle shift in comments

Back in the day.