The first monetary policy gathering of the year comes amid a milieu of moderate inflation and a job market that continues to add payrolls even as policy rates rise. Investors and analysts are parsing signals about when the first rate cuts might arrive, including potential moves anticipated by the European Central Bank this year. Opinions are divided on the timing of the initial 0.25 percentage point reduction, yet there is broad agreement that the target range for the federal funds rate will stay at 5.25% to 5.50% this week, a level not seen since 2001. The U.S. economy expanded at an annual pace of 3.1% in the fourth quarter, with quarterly growth at 0.8%, though forecasts point to a gradual slowdown. Economists at CaixaBank Research suggest the Fed may want to temper the rate-cut expectations already priced into markets, noting that there remains insufficient evidence that inflation will stay sustainably at 2%.
