The Federal Reserve raised its benchmark interest rate by a quarter percentage point recently, which indicated that it is seeing progress in its battle with inflation. This came after a series of outsized rate increases over the last year. While inflation is cooling, it is still far from the Fed’s target.
In addition, the January job report showed explosive job growth, with nonfarm payrolls increasing by 517,000, far higher than the 187,000 market estimate. Given the tight labor market, Minneapolis Fed President Neel Kashkari stated that the central bank has not made sufficient progress and anticipates that the Fed funds rate will climb to 5.4%.
