• Given all the other noise impacting markets this year, interest rate policy has moved to the periphery for many investors. 
• Many central banks around the world have consistently lowered rates as inflation has moderated (see chart below), judging that easier monetary policy to help spur growth outweighs the risks of an inflation rebound. 
• The US Federal Reserve is in a more difficult position. Trade and immigration policy have been volatile, at best, which adds opaqueness to the paths for inflation and the labor market. 
• Higher rates in the US should help strengthen the US dollar, all else equal, which has not been the case so far this year. 
• Many strategists expect the Fed to remain cautious before easing rates later this year. But how would markets react if rates unexpectedly remain elevated? When do corporations and consumers begin to feel the bite from tighter monetary policy? These are questions that could impact equity and currency markets more than even noise surrounding trade policy and geopolitics.

Sources: Bloomberg; https://www.bloomberg.com/opinion/newsletters/2025-06-16/the-us-is-exceptional-when-it-comes-to-rates?srnd=undefined&sref=D7M7ot1R

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