Updated economic projections from Federal Reserve officials this week are expected to show fewer interest rate cuts than policymakers anticipated three...
WASHINGTON - Updated economic projections from Federal Reserve officials this week are expected to show fewer interest rate cuts than policymakers anticipated three months ago, faster expected inflation, and slower growth, a pinpoint economic outlook that will carry the weight of the U.S. central bank's authority.
Since the end of last year, precision has not been the Fed's ally as officials appeared to lock in three rate cuts for the year, only to be side-swiped by inflation that didn't decline as expected. As a result, they'll likely revise their outlook to just two quarter-percentage-point rate reductions for the year or perhaps just one, with doubts even around that.The U.S. Labor Department on Wednesday will publish new inflation data just hours before the 2 p.m.
Today, policymakers are neither fully convinced inflation will return to the 2% target without a longer period of tight monetary policy, nor fully assured that the job market won't come under stress and slide fast toward higher unemployment. Yet hiring and wage growth remain robust. Data released on Friday showed U.S. firms added 272,000 jobs in May, well above the average monthly pace of 183,000 in the decade before the pandemic, with wages rising at a 4.1% annual rate.
The 4% unemployment rate recorded in May, for example, is already where policymakers at the median expect the U.S. to end the year; yet the ongoing job and wage growth offered clear signs of strength.
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