Fed officials warn of recession risks, and a shift towards dovish policies is becoming a trend.

[Block Rhythm] The Federal Reserve Board of Governors member Milan pointed out a key issue recently: there have been several abnormal fluctuations in recent inflation data. These abnormalities are mainly caused by the impact of the government shutdown, which has directly distorted the true performance of housing inflation. Over the course of the year, there is indeed a significant upward deviation in CPI—this means that the currently published figures may be higher than the true state of the economic operation.

What is more noteworthy is that this governor has sent a clear signal: if policies remain unchanged, the risk of recession will continue to rise. In this environment, the market generally expects downward pressure on policy interest rates. Milan believes that the recent data performance should drive decision-makers to adjust towards a more moderate direction—commonly referred to in the market as a “dovish” stance.

In other words, under the dual pressure of distorted inflation data and emerging recession signals, expectations for interest rate cuts are taking shape. This is undoubtedly an important policy signal for investors focusing on the Fed's movements.