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US Federal Reserve likely adopts cautious stance on rate cuts in 2024
(MENAFN) The US Federal Reserve may take a more measured approach to rate cuts next year as President-elect Donald Trump prepares to assume office in January, based on experts.
Bernd Weidensteiner, a US economist at Commerzbank, told Anadolu Agency that the US economy has exceeded expectations this year, successfully managing a series of sharp rate hikes through mid-2023.
“It is important for (the US economy) to safeguard what it has achieved, (as) the Fed's goal was to ‘cool’ the labor market, since an overheated labor market would make it more difficult to achieve the inflation target,” said Weidensteiner.
He highlighted that the economy has added an average of 150,000 new jobs per month this year, even accounting for temporary factors such as storms and strikes. Meanwhile, the unemployment rate has risen “slowly but steadily” to 4.2 percent in November, marking a half-percentage-point increase compared to a year ago.
Weidensteiner underscored that the Federal Reserve must carefully assess the risks associated with further rate cuts, as these could hinder its efforts to bring inflation closer to target levels.
Inflation, he noted, has shown little improvement in recent months. Core inflation has remained within a narrow range of 2.6 percent–2.8 percent over the past six months, and the recently announced consumer price index (CPI) has stayed above 2 percent.
Bernd Weidensteiner, a US economist at Commerzbank, told Anadolu Agency that the US economy has exceeded expectations this year, successfully managing a series of sharp rate hikes through mid-2023.
“It is important for (the US economy) to safeguard what it has achieved, (as) the Fed's goal was to ‘cool’ the labor market, since an overheated labor market would make it more difficult to achieve the inflation target,” said Weidensteiner.
He highlighted that the economy has added an average of 150,000 new jobs per month this year, even accounting for temporary factors such as storms and strikes. Meanwhile, the unemployment rate has risen “slowly but steadily” to 4.2 percent in November, marking a half-percentage-point increase compared to a year ago.
Weidensteiner underscored that the Federal Reserve must carefully assess the risks associated with further rate cuts, as these could hinder its efforts to bring inflation closer to target levels.
Inflation, he noted, has shown little improvement in recent months. Core inflation has remained within a narrow range of 2.6 percent–2.8 percent over the past six months, and the recently announced consumer price index (CPI) has stayed above 2 percent.
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