Comerica(US:CMA) Xin Hua Cai Jing·2026-02-24 06:36Core Viewpoint - Comerica Bank's chief economist Bill Adams suggests that the Federal Open Market Committee (FOMC) is likely to maintain the federal funds rate unchanged before Jerome Powell's term ends in May 2026, despite robust economic growth and inflation remaining above target [1]. Economic Outlook - The FOMC perceives strong resilience in the U.S. economy, with no immediate recession risks [1]. - Positive factors supporting growth until 2026 include the lagged effects of previous rate cuts, increased government spending, a recovering real estate market, and a surge in artificial intelligence investments [1]. - A recent Supreme Court ruling against tariffs imposed by the Trump administration is expected to provide additional liquidity to businesses and consumers, further boosting economic activity [1]. Inflation Concerns - Policymakers remain cautious about inflation, despite January's Consumer Price Index (CPI) dropping to 2.4%, the lowest since May 2025 [1]. - Core inflation remains sticky, and structural tightness in the labor market poses potential upward risks [1]. - The primary downside risk to economic growth is not insufficient demand but rather labor supply bottlenecks, which could trigger a resurgence in inflation if wage-price spirals re-emerge [1]. Policy Stance - The FOMC is inclined to adopt a wait-and-see approach regarding policy adjustments [1]. - Even with favorable economic data, the FOMC lacks sufficient reasons to initiate a new round of rate cuts as long as inflation does not sustainably and credibly return to the 2% target [1]. - This strategy aims to prevent premature easing that could reignite inflation and to provide policy space for Powell's successor [1]. Market Expectations - Market expectations for rate cuts in 2026 have shifted, with traders anticipating that the first cut may be delayed until after mid-year, barring significant economic deterioration [2].