Fed’s Next Move: Rate Decision Scheduled for Wednesday
Since the Fed increased interest rates by 25 basis points in March, there has been a shift in the economic situation. Recent manufacturing data has shown disinflation, but services data and food prices remain elevated, which could shape the Fed’s rate decision and guidance.
JPMorgan Chase and Bank of America’s recent earnings figures indicate that US consumers are still resilient, and one-year inflation expectations have experienced a sharp increase in March. On Wednesday, it is anticipated that the Fed will raise interest rates by 25 basis points. However, Fed Chair Jay Powell may want to remain flexible on the issue of subsequent rate hikes. Furthermore, he is expected to maintain that there will be no rate cuts this year.
US Employment Update: Non-Farm Payrolls for April Due on Friday
Investors and traders who are curious about the likelihood of a rate hike on June 25 can find valuable insights in the latest jobs report. The report indicates that the US economy added 236,000 jobs in March, which aligns with the predictions of economists. The unemployment rate decreased to 3.5% in March, which is an improvement from 3.6% in February. Additionally, the participation rate increased to 62.6% last month, up from 62.5% in the previous month. The data indicates that there is an increase in the number of people entering the job market once more, possibly due to the continuous effects of the expensive cost of living on personal finances.
The jobs report also revealed that the average hourly earnings in March had grown 4.2% over the year, compared to annual growth of 4.6% in February. This indicates that the cost of living is still expensive, which could impact the Federal Reserve’s choice to increase interest rates by 25 basis points on Wednesday.