US: Confidence improves as Fed stays cautious – DBS

DBS Group Research highlights that Boston Fed President Susan Collins signalled US interest rates are likely to stay on hold, describing policy as mildly restrictive with inflation still above 2%. Futures have pushed the expected first rate cut to September. Meanwhile, US consumer confidence rose in February, though expectations remain below levels historically consistent with avoiding recession.

Fed on hold while confidence edges higher

"Meanwhile, Boston Fed President Susan Collins reaffirmed the Fed’s narrative that interest rates will likely remain on hold for some time, characterizing current monetary policy as 'mildly restrictive' and appropriate as labour market risks diminish while inflation remains above 2%."

"This guidance prompted the futures market to shift its expectation for the next rate cut from June to September."

"The market remained cautious despite the US Conference Board's February 2026 report showing consumer confidence rising to 91.2, up from an upwardly revised 89.0 in January."

"Despite the rise, the expectations index remained below the 80 threshold, which historically signalled a recession ahead."

"The present Situation Index decreased by 1.8 points to 120, reflecting a slightly more pessimistic assessment of current business and employment conditions compared to the previous month."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)