The U.S.-Iran cease-fire announced Tuesday has slightly increased investor
expectations for a Federal Reserve rate cut this year. However, the end of the
conflict removes the worst-case scenario of demand destruction from supply-chain
disruptions, leaving inflation pressures largely intact. Nick Timiraos notes
that energy and goods prices remain elevated, financial conditions are easing,
and the labor market is resilient, making it harder for the Fed to justify
near-term easing despite improved growth prospects.
