Fed officials are looking at a healthy job market, rate cut rush
With Spair
(Reuters) – Federal Reserve officials on Friday said the US job market is solid and lack of clarity about how President Donald Trump’s policies will affect economic growth and still good inflation said it emphasized their aggressive approach to interest rate reductions.
On Friday, the Labor Bureau reported an unemployment rate of 4% last month and an additional 143,000 jobs. This is “consistent with a healthy labor market that has not weakened or shown signs of overheating,” he said in Miami, Florida. .
At the same time, she said there was “significant uncertainty” about the economic impact of the new policy proposal, and that “recent advances in inflation have been slow and uneven, and inflation continues to rise.”
Due to US inflation rates, the 12-month change in the Fed’s target measures, personal consumption expenditure price index, was checked at the end of last year and measured at 2.6% in December. The Fed’s target is 2%.
“The wise step is to keep the federal funding rate for a while given the combination of factors,” Coogler said.
A University of Michigan survey published just before her speech, which saw consumer expectations for inflation surge in next year’s year’s highest since November 2023.
Stock will drop after morning data, and interest rate filling traders bet that the Fed will only be cut once this year.
In a hurry, they say
“We don’t have to hurry,” Chair Jerome Powell said last week that he was awarded a rate pass after the US Central Bank chose to stabilize US borrowing costs in a 4.25%-4.50% range. This is the way to characterize the outlook. .
He cited the need to wait for some move to respond to the need to wait for more information about inflation, the strong labor market and what policies from the new administration will bring. .
That was before Trump announced a 25% tariff on imports from Mexico and Canada over the weekend, but on Monday they made plans ahead with 10% tariffs on Chinese goods. It was just put on hold for the month.
Powell may provide new commentary on his economic and rate pass expectations when he gives Congress the first of his annual monetary policy reports next Tuesday and Wednesday.
Economists usually want tariffs to raise prices in the short term, but do not change the underlying inflation trend.
However, this may differ this time, especially given that some Fed officials may be more likely to see how households and businesses suddenly surge in inflation and believe that they can do that again. He says he’s worried about it.