Washington, D.C., February 24, 2025 – Research released by the San Francisco Fed on Monday reveals that investors and economists expect the U.S. central bank to respond “strongly and systematically” to shifts in inflation and labor market conditions.
The analysis, which examined professional forecasts and bond market movements, indicates that market participants have grown increasingly sensitive to U.S. economic data - especially since 2022.
The study notes that although inflation began rising in 2021, the Fed did not initiate interest rate hikes until 2022. Similarly, deteriorating labor market data in mid-2022 spurred the Fed to reduce the policy rate by a full percentage point starting last September. Currently, the Fed’s target rate stands between 4.25% and 4.50%.
Recent economic indicators, including a survey showing business activity falling to a 17-month low, have bolstered market expectations of two quarter-percentage-point rate cuts later this year. Interest rate futures suggest that the first rate cut could come as early as June, with a second possible as early as October.
Analysts point out that concerns over slowing economic growth are now overshadowing fears of a resurgence in inflation, influencing the anticipated Fed policy moves. The findings underscore the central bank’s readiness to adjust monetary policy in response to evolving economic conditions, as financial markets continue to closely monitor U.S. economic data.
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Broad market stocks experienced slight declines during the day, according to Alexander Morris, CEO and Chief Investment Officer of F/M Investments.
The Federal Reserve on Wednesday reduced its benchmark interest rate by a quarter point to a range of 4–4.25%, responding to slowing economic growth and persistently high inflation.
A recent Federal Reserve Bank of New York (New York Fed) study reveals that while the use of artificial intelligence (AI) among businesses has grown significantly over the past year, very few companies have carried out AI-related layoffs.
The price of gold surged sharply on Wednesday, reaching a new record of $3,530.08 per ounce. Analysts say the rise is driven by expectations of a U.S. Federal Reserve (Fed) rate cut in September and concerns over the central bank’s independence.
Russia said on Monday that its troops had advanced in the eastern Ukrainian city of Pokrovsk, a transport and logistics hub that they have been trying to capture for over a year, but Ukraine said its forces were holding on.
At least 37 people have died and five are missing after devastating floods and landslides hit central Vietnam, officials said Monday, as a new typhoon threatens to worsen the disaster.
U.S. President Donald Trump said he does not believe the United States is going to war with Venezuela despite growing tensions, though he suggested President Nicolás Maduro’s time in power may be nearing its end.
A powerful earthquake measuring 6.3 struck near the northern Afghan city of Mazar-e Sharif early on Monday, leaving at least 20 people dead, hundreds injured, and causing significant damage to the city’s famed Blue Mosque, authorities said, warning that the death toll was expected to rise.
Tanzania's President Samia Suluhu Hassan vowed on Monday to move on from deadly protests set off by last week's disputed election as she was sworn into office for her first elected term.
Jamaican Prime Minister Andrew Holness on Tuesday said that last week's Hurricane Melissa, the strongest-ever storm to hit its shores, caused damage to homes and key infrastructure roughly equivalent to 28% to 32% of last year's gross domestic product.
French judicial authorities announced on Tuesday that they had launched an investigation into the Chinese social media platform TikTok, focusing on the potential dangers of its algorithms pushing young people towards suicide.
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