Fed Seeks More Proof of Slowing Inflation Before Committing to Rate Cuts
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Inflation has slowed recently but the Fed wants more evidence that the trend will continue before committing to interest rate cuts. Core inflation fell in December but shelter costs keep rising.
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Falling goods prices have helped anchor inflation but policymakers don't want to rely too much on that. Recent global trade issues could lead to renewed price pressures.
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Housing inflation has been sticky and remains a key risk in the near term. Real-time apartment rental data shows some slowing but economists disagree on the outlook.
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Service sector inflation excluding housing has slowed but remains elevated. Competitive forces are pulling in both disinflationary and inflationary directions across industries.
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The Fed will likely assess trends in detailed inflation components and service sectors rather than just topline numbers when judging progress and deciding when to cut rates.