Fed policymakers have recently pivoted toward a more hawkish stance as inflation indices continue to run hot and the labor market appears relatively tight, given their dual mandate of promoting maximum employment and stable prices.
Job growth slowed in December, with US nonfarm payroll growth of just 199,000 in the month versus the consensus forecast of 450,000, but the unemployment rate still declined to 3.9%, the lowest level since February 2020.
Inflation remains top of mind for financial market participants heading into the new year. The Personal Consumption Expenditures (PCE) index was up 5.7% year-over-year in November, according to data released last week. The Core PCE index, the Fed’s preferred inflation measure, was up 4.7% year-over-year last month.
