Markets relieved Powell didn't tell a neutral story, says BMO Private Wealth's Carol Schleif

Monetary Policy Outlook - The Federal Reserve (Fed) is likely to implement a quarter-point (0.25%) rate cut at the next meeting, potentially signaling shallow declines into 2026 [3] - The Fed's decision will be data-dependent, balancing the dual mandate of price stability and maximum employment [2][3] - The market interpreted the Fed's stance as dovish, relieved that it wasn't a neutral outlook [8] Labor Market Analysis - The unemployment rate has increased by almost a full percentage point, a development historically associated with recessions [4] - The labor market is experiencing imbalances, with softening more than previously anticipated [4] - Policy changes in trade, immigration, and tax are impacting both supply and demand in the labor market [6] - Immigration policy and boomer retirements have dramatically changed growth in the labor market [7] Economic Uncertainties - The Fed is closely monitoring whether the impacts of policy changes are short-term/cyclical or secular/structural, as monetary policy has limited influence on structural changes [7] - There are many moving parts impacting the labor market, creating an intermediate and longer-term story [7][8]