Fed monetary policy report: Inflation has slowed notably, remains elevated

• Six-month core PCE rose at at annual 2.5% rate
• Inflation measured over relatively short periods may exaggerate idiosyncratic, temporary factors
• Labor market has remained relatively tight, demand has eased, supply has trended higher
• Wage gains slowed in 2023, but remain above pace consistent with 2% inflation
• Risks to achieving Fed’s goals moving into better balance
• Not appropriate to reduce target range until we have greater confidence inflation moving to 2%
• Ongoing softening of labor demand and improvements in labor supply should contribute to a further slowing in core services price inflation

This report is more of a review than a tool to signal what’s coming on policy.

This article was written by Adam Button at www.forexlive.com.