The possibility of US inflation dropping to 2% next year is very small, but the Federal Reserve may still insist on a rate cut path.
The likelihood of US inflation falling to the Federal Reserve's annual target of 2% in 2025 is small, but this is unlikely to change the current interest rate cut path of the Federal Reserve.
The US election is settled, consumer confidence is lower than expected, long-term inflation expectations exceed the range's upper limit.
In November, the final value of the University of Michigan Consumer Confidence Index in the usa was 71.8, although it remains the highest level since April this year, it is significantly lower than the expected 73.9, with an initial value of 73 before the election results were announced. Short-term inflation expectations hit the lowest level since 2020, but long-term inflation expectations reached 3.2%, showing signs of easing once again.
The Federal Reserve disclosed more details about the upcoming framework assessment, focusing not on the 2% inflation target.
The Federal Reserve announced more details on Friday about the upcoming framework review, including a special focus on the central bank's communication methods. The review will cover the Federal Open Market Committee's statement on long-term goals and monetary policy strategy, as well as the Fed's communication. The Federal Reserve stated in the announcement that the 2% inflation target will not be the focus of the review. "We welcome new ideas and critical feedback, and will draw lessons from the past five years to adjust our approach as appropriate to best serve the American public we are responsible for," said Fed Chairman Jerome Powell in the statement. Decision-makers will meet on February 2.
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The forex market bets on the resurgence of "volatile trading". Did the dollar enter a "frenzy state" after Trump took office?
Hedge funds have begun to purchase options that can profit from increased forex volatility; traders expect a policy divergence between the usa and europe.