Fed delays rate cuts amid easing inflation
The US Federal Reserve faces a dilemma regarding how to address inflation and the labor market. While inflation has begun to decline and is approaching 3.4%, it remains above the central bank’s target of 2%, and the labor market shows signs of weakness but with a low unemployment rate of 4.1%. Therefore, it is expected that the Fed will keep the interest rate unchanged at its upcoming meeting, although a 25 basis point hike remains possible if inflationary pressures persist. The division among members of the Federal Open Market Committee (FOMC) continues regarding the need to raise rates or to hold steady, and most economists anticipate the situation will remain stable until the end of the year, with inflation staying above target until 2028. Meanwhile, weak data and a slowing labor market raise concerns about possible easing of monetary policy in the future.
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