As inflation shows signs of cooling, the Fed has significantly slowed its aggressive rate hike policy. At the FOMC’s first meeting of 2023, the Federal Reserve raised interest rates by 25 basis points, marking the smallest rate hike since March 2022. Market participants are expecting that the Fed would slow its rate-hiking campaign over the next few months.
Moreover, the U.S. job market remains astonishingly tight. Non-farm payrolls increased by 517,000 in January, snapping a five-month string of slowing employment growth and pushing the unemployment rate down to a 53-year low.
