We are also seeing evidence that the jobs market is cooling even if it is yet to show up in payrolls numbers. Rising credit card and auto loan delinquencies already hint at intensifying stress and we fear that this will spread to an increasing number of households. The consumer remains key with the combination of elevated borrowing costs and tight credit availability plus pandemic-era savings being exhausted and student loan repayments having restarted constraining consumer spending growth over coming quarters. We do expect to see weaker economic activity in the coming months. Slower growth, jobs and inflation are on their way But the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured.' In the subsequent press conference, we expect Chair Powell to repeat the sentence from the Congressional testimony that it will “likely be appropriate to begin dialling back policy restraint at some point this year. Wording similar what Powell used in Congress that 'the risks to achieving our employment and inflation goals have been moving into better balance' is likely. We suspect a shift to two rate cuts from three is a higher risk than the Fed moving to signal four. That said, given the dispersion of predictions by individual Fed members it would only take two of six FOMC members switching from a current 4.625% projection either higher or lower to move the median dot away from three rate cuts to signalling two or four rate cuts in 2024. We expect a similar set of projections at the 20 March FOMC meeting, with the messaging indicating that the Fed is inclined to cut rates later this year, but they need to see more evidence to justify that action. At the December forecast update, the Fed signalled they felt three 25bp rate cuts would be the most likely path forward for 2024 with a further 100bp of cuts pencilled in for 2025. Given this situation, attention will focus on the projections of FOMC members. Indeed, we (like the market) think the next move is a cut, most likely in June since Powell also suggested that officials are “not far” from having the confidence to “dial back” on the restrictiveness of monetary policy. However, there is little prospect of action at next week’s meeting with Chair Jerome Powell stating that both he and his colleagues 'believe that our policy rate is likely at its peak for this tightening cycle' when appearing before Congress on 6 March.

US growth, jobs and inflation data remain too hot for the Federal Reserve to contemplate imminent interest rate cuts with some commentators still arguing the Fed has more work to do to control inflation. Rates held, but a bias to easing set to remain

Fed next meeting on interest rates