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January data could redraw the Fed's roadmap on rates as inflation lingers
16 days ago•Source: MarketWatch
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Wholesale inflation sticks around as Warsh emerges as Fed chair prospect
Wholesale prices jumped 0.5% in December, keeping the year-over-year wholesale inflation at 3% and signaling inflation will likely stay above the Fed’s 2% target into early 2026; core prices rose 0.4% for the month, leaving the 12-month core at 3.5%. With President Trump naming Kevin Warsh as his Fed chair pick, the central bank faces the challenge of cooling inflation while keeping policy rates steady.
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Powell Likely to Stay at the Fed After Trump’s Push
Powell’s term as Fed chair ends in May, but he can remain on the Fed board through 2028. Despite Trump’s attempt to push him out, a DOJ probe may actually increase Powell’s motivation to stay, preserving the central bank’s independence. Any replacement would require Senate confirmation, and if a chair isn’t confirmed by Powell’s departure, the Fed board could appoint a temporary chair. The outcome hinges on who Trump would nominate and the Senate’s actions.
Tariffs Push Prices Up Across U.S., Fed Beige Book Finds
MarketWatch reports the Federal Reserve’s Beige Book showing tariff-related cost pressures across the U.S. are pushing prices higher in most districts, with only two of twelve districts posting slight price growth and others contending with rising costs, including healthcare and insurance, signaling ongoing inflationary pressure into 2026.
US Labor Market Faces Stagnation and Uncertainty in 2025-2026
The US labor market in 2025 showed signs of slowdown with subdued job creation and a rising unemployment rate, but no signs of a recession. Job growth is expected to remain modest in 2026, with some analysts predicting a jobless expansion, though others see potential for stabilization or growth due to policy changes and economic measures. Overall, rapid job growth of previous years is unlikely to return soon.
Federal Reserve's Rate Cuts: What They Mean for Your Finances and the Economy
Fed Chair Jerome Powell indicated that a rate cut in December is uncertain due to divided opinions among Fed officials and unclear economic data, leading markets to reduce expectations of a cut. The Fed recently cut rates by a quarter point, but future moves depend on upcoming economic data, with some officials advocating for caution amid mixed signals from the economy.
Congress Faces Deadlock as Government Shutdown Extends, Threatening Economic Impact
The ongoing government shutdown, potentially the longest in US history, is causing economic concerns, with estimates of a 0.1% to 0.2% weekly impact on GDP and fears of larger damage if mass layoffs occur. The shutdown is driven by a standoff over Obamacare subsidies and could extend into November, with possible triggers for resolution including airport disruptions or military pay issues. Polls show significant public concern about economic effects, but some analysts remain cautiously optimistic about long-term impacts.
US Government Shutdown Sparks Market Uncertainty and Rate Cut Speculation
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The Federal Reserve is likely to cut interest rates by 25 basis points amid concerns over weak job growth and inflation, but this move has sparked debate among economists about its potential impact on inflation and economic stability, with opinions divided on whether the cut is appropriate given current economic conditions.
Powell's Bold Moves and Market Reactions: A Closer Look
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