Interest Rates

The core CPI rose from a year ago by the least since 2021, and traders boosted bets that the Federal Reserve will cut interest rates three times this year.

"The January payrolls report lessens the urgency for the Fed to cut rates, but as we expect inflation to ease in coming months, we think policymakers have room to cut rates to support the labor market recovery."

"A couple [interest rate cuts] are priced in, but we could have four or five rather than two."

"The window for a cut under a Powell-led Fed is essentially closed. He is more optimistic about the labor market and economy overall than he was."

FOMC officials on both ends of the spectrum voted against the move, as both inflation and unemployment are higher than the Fed wants them to be.

The FOMC voted 10-to-2 to lower the target range for the federal funds rate by a quarter percentage point, to 3.75%–4%.