Does the Federal Reserve need to wait longer? CPI data may struggle to shake officials' cautious stance

【Block Motion】The Federal Reserve’s policy signals have been somewhat subtle lately. Official “mouthpiece” Nick Timiraos recently published an analysis suggesting that the upcoming December Consumer Price Index (CPI) data may not be enough to prompt the Fed to change its current wait-and-see stance.

What is his core point? It is that Federal Reserve officials want to see more solid evidence—that inflation needs to stabilize and continue to decline—before considering further rate cuts.

Let’s review recent actions: the Fed has lowered the benchmark interest rate at each of the past three meetings, with the most recent being in December. Interestingly, their reason for doing so is not because inflation has fallen, but due to concerns about the labor market—fearing that employment data might decline faster than expected.

So, when can we expect to see another rate cut? Federal Reserve officials need to see new signals—either the labor market begins to deteriorate noticeably, or price pressures truly ease. Especially the latter, which might require a few months of inflation data to confirm. In short, this timetable isn’t very urgent.