The Fed has to accept disinflation has stalled out, says BNY's Vincent Reinhart

Monetary Policy Outlook - The market anticipates the Federal Reserve (Fed) will cut interest rates by 25 basis points at the September meeting [2] - The Producer Price Index (PPI) data reinforces expectations of a rate cut, focusing on the magnitude rather than the likelihood [2] - The Fed's decision to cut rates is primarily driven by concerns about employment, despite stalled disinflation [2] Dual Mandate Considerations - The Fed's weighting of its dual mandate (employment and inflation) depends on proximity to goals; with inflation closer to target, employment concerns gain importance [4][5] - Historically, the Fed tends to act more decisively when concerned about employment [4] - Some Fed speakers express reservations about inflation remaining a persistent problem [6] Risks and Uncertainties - Tariffs potentially seeping into prices could cause inflation to rise, complicating the Fed's policy decisions [8] - The Fed is willing to accept stalled disinflation to a certain extent, but dislikes it, tempering enthusiasm for rate cuts [9]