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2026-02-13 21:49:31
[A Delicate Balance at the End of Powell's Tenure: Slowing Inflation but Stable Employment] ⑴ The Wall Street Journal's review of the January CPI report indicates that the January CPI rose 2.4% year-on-year, lower than the previous value and expectations; the core CPI rose 2.5% year-on-year, in line with expectations. The non-farm payroll report released earlier this week showed that January job growth exceeded expectations, and the unemployment rate fell to 4.3%. ⑵ Despite the positive impact of slowing inflation and robust employment, the Federal Reserve faces a delicate balance in the final months of Chairman Powell's eight-year term: curbing inflation without harming the labor market. ⑶ Aggressive interest rate hikes thwarted the price surge in 2022, but with subsiding inflation and a cooling job market, the Fed has cumulatively cut rates by nearly 2 percentage points since the summer of 2024, pausing in January. ⑷ Economists generally expect inflation to fall further in 2026, with increasing signs of easing price pressures. Companies such as PepsiCo and General Mills have announced price reductions for some products to attract budget-sensitive consumers. (5) From a policy perspective, the current combination provides the Federal Reserve with more room to maneuver: inflation is slowing but core inflation is rising slightly month-on-month, coupled with strong employment, reducing the urgency for a rate cut in the short term. However, tariffs and exchange rate factors may reignite inflationary pressures in the second half of the year. (6) The market needs to pay attention to the evolution of inflation data in the coming months, especially whether the core services and goods sub-categories will rise due to the impact of tariff transmission. This will determine the timing of the Federal Reserve's first rate cut.
