Analyst: This Year Inflation More Sticky, Fed Chair Candidate Continues to Be Market Focus

On January 29, Allspring analyst Matthias Scheiber noted that the U.S. job market is stabilizing and inflation remains sticky—factors pushing the Federal Reserve to take a wait-and-see approach as it assesses how prior rate cuts have impacted economic growth. Current interest rates appear near the neutral level—one that supports stable employment while aiding inflation control. That said, the AI-fueled investment and capital expenditure boom, plus a sharp jump in commodity prices (including industrial metals), could keep inflation more persistent this year. Markets have largely priced in one of the two rate cuts expected late last year. The top focus remains the announcement of the new Federal Reserve Chair—with the race still open—but there’s a broad expectation that Powell’s successor will be more dovish. Government pressure on the Fed to lower rates will stay a recurring theme this year. (FXStreet)