"The new dot plot likely will indicate that most members retain a bias to ease policy this year and in 2027. But the biggest risk to markets is if new projections show the median Fed official now expects rates to stay on hold through year-end."
"The Personal Consumption Expenditures Price Index, excluding food and energy prices, rose 3.1% in January from a year earlier. That's an acceleration from November, when the core index rose at a 2.8% annual pace."
"February data suggested that there was, on net, no hiring at all last month or in December. The January job surge now looks like the outlier, with the economy returning to job-shedding mode last month."
The Federal Reserve's upcoming Summary of Economic Projections will provide critical guidance for incoming Fed chair Kevin Warsh. Key economists anticipate most officials retain a bias toward easing policy in 2026 and 2027, though the biggest market risk exists if projections show the median official expects rates to remain on hold through year-end. Since December's projections anticipated one rate cut in 2026, conditions have shifted with core inflation accelerating to 3.1% in January and labor market data showing mixed signals. February employment data revealed no net hiring, contradicting Powell's January optimism about labor market stabilization. The unemployment rate stands at 4.4%, with recent job losses suggesting the economy has returned to shedding positions. These economic crosscurrents create a challenging environment for Fed policymakers deciding whether to accommodate supply shocks or maintain restrictive rates.
Read at Axios
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