Powell Still Sees Room for the Fed to Cut Rates This Year

Powell Still Sees Room for the Fed to Cut Rates This Year By Hardika Singh

Federal Reserve Chair Jerome Powell still expects that declining inflation will allow for interest-rate cuts this year. Meanwhile, immigration could help explain the strength in the job market, and Treasury Secretary Janet Yellen heads to China this week with a tough economic message as the Biden administration discusses raising tariffs. Read on for this news and more.

Top News Powell Still Sees Room for the Fed to Cut Rates This Year

Stronger-than-anticipated economic activity this year hasn't changed the Federal Reserve's broad expectation that declining inflation will allow for interest-rate cuts this year, Chair Jerome Powell said Wednesday. Powell pointed to signs that labor-market conditions are less tight than they have been in recent years, a view that has eased concerns that paychecks and prices might rise in tandem.

U.S. Economy The Jobs Numbers Aren't Adding Up. Immigration Helps Explain Why.

U.S. employment figures contain a mystery that has left many economists scratching their heads: How is the country generating so many jobs even while the unemployment rate has drifted up? The emerging consensus: a surge in immigration. It not only explains inconsistencies in the jobs data but suggests the economy can keep adding plenty of jobs without overheating. That in turn would let the Federal Reserve still consider interest-rate cuts.

Financial Regulation Janet Yellen Missed the First 'China Shock.' Can She Stop the Second?

As Janet Yellen prepares to travel to China this week as President Biden's Treasury secretary, her prior optimism about the Chinese economy has given way to a sense of alarm. A cascade of inexpensive Chinese clean-energy goods is driving down prices on global markets, threatening to snuff out American efforts to nurture a domestic clean-energy industry. In meetings in Guangzhou and Beijing, Yellen is expected to tell her Chinese counterparts to stop relying on exports to prop up their underperforming economy and instead boost their own consumer market.

Forward Guidance Thursday (all times ET)

4 a.m.: Eurozone services PMI

4:30 a.m.: S&P Global U.K. Services PMI

5 a.m.: EU producer-price index for February

8:30 a.m.: U.S. trade report for February

8:30 a.m.: U.S. weekly jobless claims

8:30 a.m.: Canada trade report for February

11:45 a.m.: Chicago Fed's Goolsbee at Multi-Chamber Economic Outlook Luncheon and Expo

12:15 p.m.: Richmond Fed's Barkin speaks to Home Building Association of Richmond

7:30 p.m.: Fed's Kugler speaks at Women in Economics Symposium in St. Louis

Friday

8:30 a.m.: Canada labor force survey

8:30 a.m.: U.S. employment report

9:15 a.m.: Fed's Barkin speaks to Greater Baltimore Committee

11 a.m.: Dallas Fed's Logan speaks to Duke University Department of Economics

12:15 p.m.: Fed's Bowman speaks at Shadow Open Market Committee meeting in New York

Research ISM Services Data Suggests Economic Growth Cooling Alongside Inflation

The fall in the ISM services index for March is consistent with hard data that U.S. economic growth is slowing from its unsustainably strong pace in the last half of 2023, Capital Economics economist Stephen Brown says. The dip was driven by weakening components for new orders and supplier delivery time, though the latter is hardly cause for concern with markets focusing on the risk that the Fed might once again delay its loosening cycle, he says in a note. More striking, however, was the plunge in the prices paid component to its lowest level since March 2020, ahead of the pandemic, implying PCE core services inflation, excluding housing, will drop to 2% from 3.4% in February, Brown adds. - Edward Frankl

Basis Points Turkish inflation continued to rise last month ahead of local elections in which President Tayyip Erdogan's party suffered a serious blow. The country's consumer-price index, a measure of rises in domestic prices, increased by 68.50% compared with March last year, accelerating from a 67.07% annual rate in February, according to figures published Wednesday by statistics agency Turkstat. Core prices, stripping out the more volatile effects of energy, food, tobacco and gold, accelerated even faster. - Joshua Kirby Makers of consumer goods have been bracing for a slowdown in consumer spending after ebullient pandemic times. Ulta Beauty is now saying that the decline is happening faster than it expected. - Natasha Khan About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

04-04-24 0716ET