Torsten Slok, Chief Economist at Apollo Global Management LLC, stated that as the Federal Open Market Committee's March meeting commenced on Tuesday, the Federal Reserve is likely to be concerned about the inflation aspect of its dual mandate.
Slok noted that with the core PCE inflation rate at an annualized 3.1% in January, prices have moved in the wrong direction relative to the Fed's 2% inflation target. Now, with rising oil prices adding to the mix and stimulus measures from President Trump's "big and beautiful bill" expected to boost growth, the case for keeping interest rates unchanged is stronger.
"Among the 12 voting members of the FOMC, 10 voted against lowering interest rates," he said, referring to the committee's January meeting. "They are likely to come into this meeting and say, 'If anything, since the last meeting, the risks to inflation have actually shifted more to the upside.'"
He added that he believes the stagnation in the labor market is still more a result of reduced immigration on the supply side rather than weaker demand for workers. The Federal Reserve will announce its interest rate decision on Wednesday.
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