Lead with the two numbers a borrower actually needs. Inflation: 4.2 percent, running hot on Iran-war energy [1]. The market's pricing of the Federal Reserve's next move: roughly 70 percent odds of a rate INCREASE before the midterm elections, per the CME FedWatch figures in Friday's reporting [1]. Hold those while you read what the podium said the same day.
'There should be a reduction, but I'll go with the chairman,' the president told reporters Friday [1] - notable both for the preference and for the rare deference to Fed Chair Warsh attached to it. A preference about where rates should go is not a checkable fact, so we are not rating it. We are pricing it, the way the market does, because a household has to.
The pricing runs the other way. The Fed's own June projections - the dot plot we charted when the minutes landed this week - show nine of eighteen participants expecting at least one hike this year against exactly one expecting the cut. The minutes attributed the inflation to the lingering effects of tariffs and dropped the easing language altogether, as we reported against the Treasury Secretary's dog-that-didn't-bark claim. The futures market has read all of it and put its money at about 70 to 30 on the next move being up, not down [1]. When a preference and a price disagree, the price is the one that clears.
What this means at the kitchen table is timing. A family holding off on locking a mortgage because relief is 'coming,' or carrying a variable-rate balance on the same theory, is budgeting on the podium's direction. If the priced direction arrives instead, credit cards and home-equity lines reprice within a billing cycle or two, and the cost of having waited lands on the waiters. Budget to the 70, hope for the 30 - that order, not the reverse.
Two predictions go on the log before we close, because the honest way to handle forecasts is to date them and check them. Treasury Secretary Bessent, June 28: the US will 'print more than 3 percent growth for the year,' and 'we will be back towards the Fed's 2 percent inflation target' by year-end [2]. Growth above 3, inflation near 2, from an economy currently printing 4.2 with a hike priced at 70 percent. The log is dated; December will grade it, and we will publish the grade either way.
