(Reuters) – The U.S. Federal Reserve (Fed) kept its benchmark overnight interest rate unchanged at a range of 5.25% to 5.50% at its policy meeting on March 19 and 20, with officials predicting three 4% changes by the end of the year. We continue to expect a one-tenth of a percentage point rate cut to be approved. 2024.
Policymakers say they want to see more data that shows inflation is returning to the central bank's 2% target before starting to ease borrowing costs.
Here's a summary of recent key data the Fed is monitoring:
EMPLOYMENT (released on April 5th, next release on May 3rd):
U.S. companies added a bigger-than-expected 303,000 jobs in February, with job growth for the past two months revised upward by 22,000. The unemployment rate unexpectedly fell to 3.8%, marking the 26th consecutive month below 4% and the longest period since the 1960s, but Richmond Fed President Thomas Barkin said it was a “pretty strong jobs report.”
Fed officials believe that continued strong job growth could still reduce inflation, especially if labor supply continues to increase and wage growth slows. I feel more secure. Both increased in March. The labor force grew by 469,000 people, the most since August, while annual wage growth slowed to 4.1%, the lowest since June 2021. Still, this rate is above the 3.0% to 3.5% range suggested by most policymakers. The view is that this is consistent with the Fed's 2% inflation target.
Job information (released on April 2nd, next release on May 1st)
Federal Reserve Chairman Jerome Powell is closely monitoring the U.S. Department of Labor's Job Openings and Labor Turnover Survey (JOLTS) for information on labor supply and demand imbalances, particularly the number of jobs available per unemployed person. . But I'm looking. The ratio had been steadily declining toward pre-pandemic levels, but since October it has ranged from 1.35 to 1.43, above the 1.2-to-1 level before the health crisis.
In February, the latest release, this number decreased as the number of people seeking work increased and the unemployment rate rose.
Other aspects of the survey, such as smoking cessation rates, are slowly returning to pre-pandemic levels.
Inflation (PCE released on March 29th, next CPI released on April 10th):
The personal consumption expenditures (PCE) price index, which the Fed uses to set its 2% inflation target, rose at an annual rate of 2.5% in February, up from 2.4% in January. Core inflation, which excludes volatile food and energy prices, rose 2.8%, down slightly from an upwardly revised 2.9% in January. Neither number will give Fed policymakers confidence that inflation will steadily return to target.
The CPI increase rate in February was 3.2% year-on-year, up from 3.1% in the previous month and exceeding analysts' expectations. Meanwhile, core interest rates, which exclude food and energy costs, fell only slightly to 3.8% from 3.9%, another reminder that the Fed's inflation fight may last longer than expected. Rising gasoline and shelter costs contributed most of the CPI increase. It remains unclear whether the consistent easing in housing costs expected by the Fed is imminent.
(Reporting by U.S. Economics and the Fed Team; Edited by Paul Simao)