Overview

• The Federal Reserve is set to hold a two-day policy meeting this week, with investors assigning roughly even odds to the prospect of an interest rate cut in March.
• Recent economic data shows a deceleration in inflation numbers, with the Fed’s preferred gauge dropping to 2.9% in December, the first time it has been below 3% since early 2021.
• Despite inflationary concerns, consumer spending remains robust, potentially due to the decrease in inflation.
• Key data releases this week include the monthly jobs report, job openings and consumer confidence data, and a quarterly employment cost index.
• The Fed's decision could be influenced by the strength of the outlook for consumer spending, as well as the recent economic data.