At their last meeting in December, the US Federal Reserve officials were worried about inflation trapped above their 2% target and had witnessed Job Gain Going in what seemed to be a decline that emerged.
When they meet on January 28-29, the mood around the latest economic data will at least shift back to more belief that inflation will continue to fall and easing further concerns about the state of the work market.
The usual warning among economists – “all the same things” – may prove to be very important given the uncertainty about how the new Trump government decree can affect the price of imports, the size of the workforce, and regulatory landscape.
The size of the uncertainty of the policy has soared since the Donald Trump election won in November. But the data since December is still beneficial for most FED officials who feel the work market and economy as a whole are in a healthy condition, with inflation is expected to recede in the coming months.
After cutting the benchmark level, the full percentage points in the last three meetings of 2024, the Fed is expected to stop and let it change in January in the range of 4.25%-to 4.50% as a policy maker assesses how long the monetary policy ” Tight “” tight “is needed and how much they need to cut to reach the” neutral “interest rate.
Inflation is likely to increase
The latest consumer price index report shows that inflation is slightly increased in December but is driven by volatile energy prices, something Fed tries to calculate the analysis of the underlying price trends.
The core level of inflation, does not include food and energy, drops a little. More importantly for the Fed, CPI and other components of the separate personal consumption expenditure index showed an increase at an annual level of around 2% until December and had approached the Fed target on the base of three to six months.
In addition, Fed officials feel the data is ready to benefit them this year. Because inflation suddenly heat in early 2024, because strong months falling from an annual calculation called “basic effects” will help the anchor inflation lower, all the same.
Advantages of work that still survive
“The risk of downside to the labor market seems to have decreased,” said Fed Chairman Jerome Powell after the December meeting. While the job market is still cooling, he said, it remains “solid,” the situation expected by Fed to maintain it.
Data from that time had survived, with the economy adding an estimated quarter million jobs in December and the unemployment rate dropped to 4.1% – Other reasons officials felt comfortable to pause the level of level at least for now.
Source: Reuters
