Fed Rate Cut Hopes Dashed by Strong Data, Though Risks Remain for 2023 Policy
• Fed officials like Waller, Mester, and Daly have said a March rate cut is unlikely given still-strong economic data like retail sales and the job market.
• Markets expect more rate cuts this year than Fed projections, hoping for a cut as early as March, but recent data dashes those hopes.
• Risks like Middle East conflict could stall inflation's descent or rekindle it, delaying rate cuts.
• But strong data suggests the Fed still may pull off a soft landing with 2% inflation without sharp unemployment rise.
• At Davos, business leaders like Dimon and Moynihan said they can thrive under Trump or Biden, but Lagarde admitted "we are all concerned" about 2024 election.