WASHINGTON– With the Federal Reserve set to meet this week and analysts expecting it to adjourn by announcing the first rate cut of the year, analysts say the decision facing the Fed is complicated, as jobs are declining at the same time prices have been increasing.
“It’s the worst kind of setup for the Fed,” Claudia Sahm, New Century Advisors chief economist and former Federal Reserve Board economist, told Yahoo Finance. “They will not be cutting because we have good news on inflation. They’ll be cutting because we have bad news on employment.”
Sahm told Yahoo Finance that the Federal Reserve is expected to cut rates by 25 basis points during its two-day meeting this week, adding that, in her view, inflation is “still too firm.”
Other strategists told Yahoo Finance they agree.
“Inflation is still elevated. It’s been elevated, and it’s moving in the wrong direction right now,” Collin Martin, fixed-income strategist at Schwab Center for Financial Research, told the outlet.
Not a ‘Lock’
RSM chief economist Joe Brusuelas said, “Yes, you’re going to get your rate cut out there in trading land. But I have to tell you, the underlying tenor of the data doesn’t suggest that it’s a lock that you’re going to get three rate cuts before the end of the year.”
As has been reported, a revision of jobs data released last week showed the U.S. employed 911,000 fewer people between April 2024 and March 2025 than initially reported.
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