Is Inflation Really Cooling Down Here Is What the Fed Says

Federal Reserve officials noted indicators of easing inflation and a cooling labor market, but they seek more evidence before cutting rates. Data highlights slower wage growth and price drops in some businesses, indicating increased price sensitivity among customers. Despite these trends, the Fed emphasized a cautious approach and the need for additional data to confirm a sustainable return to their 2% inflation target. The labor market shows fewer job postings but not widespread layoffs. While balancing mandates of stable prices and maximum employment, officials are concerned about lower-income households spending less and fewer job openings. Most Fed officials believe the current benchmark rate suffices to slow growth and reduce inflation, with limited expectations for rate cuts this year. Chair Jerome Powell suggested one or two rate cuts might occur, though some officials foresee none. Financial markets responded positively to comments on inflation progress, despite earlier concerns about persistent price increases and financial strains on lower- and moderate-income households.

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