Strong US data and geopolitical risks keep Federal Reserve cautious on interest rate cuts

The Federal Reserve is facing a tricky mix of stronger-than-expected U.S. economic data and rising geopolitical uncertainty, and Morgan Stanley strategist Andrew Sheets said policymakers may still be inclined to keep rates elevated if inflation pressures do not ease. At the same time, San Francisco Fed President Mary Daly said the central bank is in a “good place” but is not ready to give a clear signal on where rates are headed because the outlook remains unusually uncertain.