Economic growth, improving labor market, Fed likely to cut interest rates soon

The economy has been growing steadily every month since late 2023, a stepping stone for Federal Reserve officials to start cutting interest rates, possibly as early as September.

Economists expect the US personal consumption expenditures price index to be unchanged in May. (Source: AP)

Economists expect the U.S. personal consumption expenditures price index to be unchanged in May and the core index excluding food and energy to rise a minimum of 0.1%, based on the median forecast in a Bloomberg survey of economists.

The report, due June 28, is likely to show a 2.6% annual increase in consumer prices in both the headline and core measures. The expected increase in the core measure, which paints a better picture of underlying inflation, would still be the lowest since March 2021.

Since their last meeting, Fed officials have said that while they are encouraged by other inflation data easing — including consumer prices — they need to see several months of such progress before cutting rates. At the same time, the labor market — another part of the Fed’s dual mandate — remains strong, albeit at a slower pace. A “healthy” jobs market gives policymakers flexibility in when to cut rates.

The latest inflation figures, which will be accompanied by personal spending figures, will show spending on services, after recent retail sales data showed weaker demand for goods. Experts are calling for a modest increase in nominal personal consumption as well as incomes.

Economists do not believe the slow pace of inflation will be enough to convince officials that by the time the Federal Open Market Committee (FOMC) meets in July, inflation is on track to fall back to the Fed's 2% target.

Other data due next week will include June consumer confidence and reports on new and existing home closings in May. In addition to first-quarter economic growth estimates, the U.S. government will release durable goods orders for May.

Source: https://baoquocte.vn/kinh-te-tang-truong-thi-truong-lao-dong-khoi-sac-fed-co-kha-nang-ha-lai-suat-som-276061.html