However, Powell is walking a tightrope, aware that easing rates now might reignite inflationary pressures that are still simmering beneath the surface.<\/p>\n
November\u2019s inflation data showed a slight uptick to 2.7%, with core inflation remaining stubborn at 3.3% for the fourth consecutive month. Despite the Fed\u2019s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, nearing its target of 2%, there are lingering challenges, especially in housing costs, which have been a key driver of higher inflation. While some signs of relief in shelter costs have emerged, inflation isn\u2019t close to being fully under control.<\/p>\n
Another major concern is the labor market. Unemployment remains historically low, and wages are climbing steadily, creating further inflationary pressures as businesses pass on higher labor costs. The cost of services, excluding housing and energy, continues to rise, pushing inflation above the Fed\u2019s comfort zone.<\/p>\n