Interesting developments have emerged regarding the FOMC’s rate cuts. Mr. Milan, a member of the 米連邦準備制度理事, appears to be inclined to support three rate cuts this year, but the FOMC overall also seems to be keeping in mind the possibility of four rate cuts. However, in reality, it seems likely that there will be around three rate cuts for the remainder of this year.

Since before the war, the fundamental components of inflation have long been a troublesome issue for the FRB. At this point, the expectation that the prices of core goods and housing inflation will continue to fall is, to some extent, a positive factor. It is also thought that within a year, the 12-month PCE could settle near the 2% target.

As for the energy shock, the prevailing assessment is that—compared with before the war—it has not brought about major changes in inflation outlooks 12 to 18 months ahead. It is important that there are no signs of a “wage-price spiral,” and that long-term inflation expectations remain stable. However, due to the war, the risk distribution around baseline forecasts has unquestionably expanded. In other words, uncertainty regarding the FOMC’s rate-cut scenario has increased more than ever before. It is likely that the situation will continue in which how the market responds depends on upcoming economic indicators.