Fed seen curbing rate-cutting plans with inflation staying high
How did the May jobs report influence traders' expectations regarding the timing of future rate cuts?
The May jobs report influenced traders' expectations regarding the timing of future rate cuts by indicating a mixed picture of the labor market. The report showed an acceleration in payrolls and wages growth, but also a slight increase in the unemployment rate and a decrease in labor force participation. This led traders to anticipate a delay in the timing of rate cuts, with about 1.5 quarter-point reductions expected this year, according to futures contracts.
What specific inflation target is the Federal Reserve aiming to achieve, and what was the inflation rate through April by the Fed's preferred measure?
The Federal Reserve is aiming for an inflation target of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures. According to the Fed's preferred measure, inflation through April was 2.7%.
How many interest rate cuts did the Federal Reserve initially forecast for 2024, and how has this outlook changed based on recent inflation data?
The Federal Reserve initially forecasted three interest rate cuts for 2024. However, this outlook has changed based on recent inflation data, which shows that inflation has been more stubborn than expected. As a result, the Federal Reserve is likely to back away from this longstanding forecast, and it's now uncertain whether they will still pencil in two or even one rate cut for this year.