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Fed Signals Patience on Cuts as Australia’s Hot Inflation Lifts RBA Hike Odds

Policymakers emphasize proof that inflation is returning to 2% before easing, even as Australia’s core prices climb to a 16‑month high.

Overview

  • Chicago Fed President Austan Goolsbee said further easing should wait until there is clear evidence inflation is heading back to 2%, calling front‑loading cuts imprudent.
  • Fed Governor Christopher Waller described a March rate cut as “close to a coin flip” contingent on upcoming labor data, though market pricing shows a strong likelihood of holding next month.
  • Boston’s Susan Collins and Richmond’s Thomas Barkin signaled no near‑term policy change and said they want more confidence that inflation pressures will keep easing; Kansas City’s Jeffrey Schmid said high inflation remains the bigger problem.
  • Bank of England Governor Andrew Bailey called a March cut a “genuinely open question” and reiterated headline inflation is likely to be around 2% in April data, while services inflation has not cooled as much as hoped.
  • Australia’s January CPI held at 3.8% year over year and the trimmed mean rose to 3.4%, boosting expectations of another RBA hike, though Governor Michele Bullock signaled patience and a focus on quarterly readings.