Why Fed Rate Cuts Could Be Pushed Back

The Federal Reserve's March FOMC meeting signaled a shift toward a more cautious easing bias, leading to a revised forecast that pushes expected rate cuts back to September and December. Heightened macro uncertainty, driven by rising oil prices and persistent headline inflation, requires the Fed to see greater clarity on the conclusion of tariff pass-through to core goods before committing to disinflation trends. While the labor market remains in a "curious balance" with stable unemployment, low payroll growth of only 20,000 to 30,000 jobs per month suggests a lack of dynamism that may eventually necessitate policy support. Despite recent volatility, U.S. Treasuries continue to serve as effective hedges for risky asset portfolios, with investors likely to be rewarded if the Fed eventually eases in response to slowing consumer demand or a softening labor market in the second half of the year.