Barron's Live The Fed at the Crossroads
Sep 22, 2025
Blake Gwinn, head of U.S. Rates Strategy at RBC Capital Markets, discusses the Federal Reserve's recent rate cuts and the economic landscape. He provides insights into the market's reaction to Fed decisions and assesses the challenges ahead, including the state of the labor market. Gwinn emphasizes that while hiring has slowed, he's optimistic about avoiding a recession due to healthy balance sheets. He also explores inflation dynamics, Fed independence risks, and implications for mortgage rates, diving into the intricacies of macroeconomic indicators.
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Risk-Management Cut, Not A Cascade
- The Fed's September quarter-point cut was a risk-management move, not the start of a steep easing cycle.
- That means the bar for further cuts is low and the committee may pause after small data shifts.
Dot Plot Splits Signal Uncertainty
- The Fed's median dot implies two more cuts this year but the committee is split almost 50-50.
- Blake expects only one more cut and sees a likely skip at either October or December.
Tariffs Raise Unprecedented Uncertainty
- Fed officials sound uncertain because unprecedented tariff policies create no historical playbook.
- Gwinn advises ignoring dots past 2025 due to high uncertainty about long-run forecasts.