Fed Should Pause Interest Rates: Inflation High, Job Market Stable
Update: 2025-12-08
Description
The Federal Reserve should consider pausing interest rate cuts due to persistently high inflation, which has consistently exceeded the two percent target since March 2021. Services inflation, particularly non-energy services, is running hotter than goods inflation, contributing to sixty-one percent of consumer spending. Consumer inflation expectations are closer to five percent than two percent, indicating well-founded fears of further price increases. Oil prices near the bottom of their sustainable range and potential disruptions from sanctions on Russian, Iranian, and Venezuelan oil could push inflation even higher. Despite these challenges, the economy is well-positioned for long-term growth with AI investments driving capital spending and productivity gains, supporting healthy GDP growth.
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