Federal Reserve Governor Milan: I lean toward supporting three interest rate cuts by the Federal Reserve this year, but the FOMC may cut rates four times.

At present, it appears that there may only be three interest rate cuts for the remainder of this year. Even before the outbreak of war, the underlying composition of inflation had already become more challenging for the Federal Reserve. It is still reasonable to expect that core goods prices and housing inflation will continue to decline. One year from now, the 12-month PCE (Personal Consumption Expenditures Price Index) could be near the 2% target. Currently, it is believed that, compared to the pre-war period, the energy shock has not changed the inflation outlook for 12-18 months ahead. There is no evidence of a “wage-price spiral”; long-term expectations remain stable (anchored). The war has increased the risk distribution surrounding the baseline forecast.