Inflation Trends and the Labor Market

Current trends indicate that inflation is moving in the right direction, with goods inflation returning to pre-pandemic levels and services inflation gently declining. Housing inflation, a lagging indicator, is expected to show improvement as new leases begin to come into play. The Fed recognizes that the labor market remains strong, even though there is an underlying trend of softening, particularly evident in fluctuating job reports. Policymakers are closely monitoring these dynamics, noting the balance of risk and the influence they have on monetary policy decisions.