Inflation Pressures Are Easing but Rate Cut Forecast Remains Uncertain

The New Year is beginning where the old one ended -- with uncertainty about when – or whether – the Federal Reserve will begin cutting interest rates.

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Analysts have used many adjectives to describe the labor market, but consistent isn't one of them. Over the past year, the Department of Labor's monthly employment report has surprised, disappointed, delighted, dismayed and in recent months, relieved, with a series of 200,000 plus monthly job gains.

If you’re tired of predicting who will win the presidential primaries – or who will say what about whom in that process ─ there’s another increasingly popular guessing game you might want to play instead: How many times will the Federal Reserve hike interest rates this year?

Anyone looking for a clear assessment of the housing market won’t find it in the February housing statistics: Existing home sales plummeted, pending sales rose (though not by much); new home sales and single-family starts beat expectations, but permits fell more than anticipated; and inventory levels remained crimped, pushing home prices up and beyond the reach of many prospective first-time buyers.

The economy is stronger than some indicators suggest, making a recession less likely than some analysts fear, but enough of a risk to make Federal Reserve policy makers more cautious than they might like to be about boosting interest rates this year.