By Harry Wu, 21st Century Business Herald, SFC

“The dynamics of the Fed are changing and are likely to change more dramatically even in 2026,” said David Seif, Chief Economist for Developed Markets at Nomura in an interview with 21st Century Business Herald.

The situation is very complex when the Fed is tasked with maintaining price stability and achieving full employment, and these two goals are contradictory. “For example, inflation is above the target level, while the job market is weakening,” he added.

Seif found the data related to the Fed's dual mandate sent confusing signals, allowing for different interpretations. “One rational person might say that both aspects of the dual mandate suggest the Fed should take a tougher stance. Another rational person might say that both aspects should prompt the Fed to take a more dovish stance. People have different interpretations of the same data.”

Regarding the future path of the Fed's monetary policy, Nomura expects that while inflationary pressures stemming from the 2025 tariffs will ease, core services inflation will keep the Fed cautious. Under a new, more dovish leadership, the Fed is expected to cut interest rates in June and September of 2026.