Wells Fargo economists project the Federal Reserve will likely hold off on interest rate cuts until June. This forecast follows stronger-than-expected labor market data and indications of cooling inflation.
January payrolls increased by 130,000, surpassing expectations. The unemployment rate has also declined to 4.3%. Simultaneously, both headline and core Consumer Price Index (CPI) figures have moderated, with core inflation reaching its lowest annual rate in nearly five years.
Economists note that stabilizing job growth and moderating inflation reduce the likelihood of a March rate cut. However, the possibility of easing later in the year remains open, contingent on future economic data.
Further analysis indicates a slowdown in wage growth, with an annual increase of 3.4% in the fourth quarter, the weakest since 2021. Retail sales also stagnated in December, despite a modest rise in aggregate holiday spending.