At their December meeting, U.S. Federal Reserve officials expressed concern about inflation remaining above the 2% target and the job market showing signs of weakness, Reuters reports.
However, when they meet on Jan. 28-29, the mood around the most recent economic data at least will have shifted back toward more faith that inflation will continue to fall and a further easing of concern about the state of the job market.
Despite uncertainty over how new policies under the Trump administration might affect import prices, labor force size, and regulations, most Fed officials remain optimistic about the economy.
After three rate cuts in late 2024, the Fed is expected to pause at 4.25%-4.50% in January, assessing how much longer tight monetary policy is needed. December’s Consumer Price Index showed slight inflation due to volatile energy prices, but the core inflation rate, excluding food and energy, fell. With inflation nearing the 2% target and “base effects” from earlier high inflation helping to lower future readings, Fed officials are hopeful inflation will continue to align with their goals.
