FOMC Minutes: 2% Inflation Rate Remains the Main Target – Daily Brief, January 5

FOMC Minutes Meeting: Inflation remains the focus

The Federal Open Market Committee members have reiterated that inflation endures the focus, and inflation risks remain one of the critical factors they monitor. Participants indicated that higher inflation risks continued to be a key factor in determining policy outlook in FED Minutes.

The Fed warned of early easing in the monetary policy, which could erode their efforts in taming inflation. The Fed also denied any predictions of rate cuts in 2023.

Members agreed that any further hikes in rates would be appropriate. However, they noted that slower rate hikes would enable the central bank to evaluate the state of inflation and employment. The Fed said they endorsed the drop in inflation rates in October and November, but they need more significant evidence of progress before they turn downward.

November JOLTS: more substantial numbers yet tighter labor market

JOLTS came very strong with 10.458 million jobs exceeding forecasts of 10 million. However, the Bureau of Labor Statistics BLS estimated that 6.1 million people were hired, leaving around 4 million vacancies. This has left the labor market extremely tight.

December ISM: nearing estimated

For the second consecutive month, the manufacturing sector in the United States shrank. In December, the ISM Manufacturing Index, which measures the proportion of businesses experiencing growth, was at 48.4%, very close to the forecasted 48.5%. However, the manufacturing industry’s labor market remains healthy, as demonstrated in the ISM survey.

UK’s Sunak promises to cut inflation in half.

British Prime Minister Rishi Sunak has pledged to cut inflation in half this year, tackle a health system crisis, and tackle illegal immigration. Sunak laid out his priorities as the UK is going through a deep economic crisis. The UK is now suffering one of the worst financial crises because of the country’s high inflation rates, energy shock, reduced productivity, sluggish business investments, and the harm that Brexit has caused to trade and commerce.

2023 is expected to be worse for Britains, as economists and strategists expect a much more strongly felt recession and longer-lasting inflation. The government is also expected to stick to its highly tight fiscal policy.

UK’s Composite Purchasing Managers Index (PMI) for the month of December came as forecasted at 49.0%, exceeding November’s data of 48.2. On the other hand, UK Services Purchasing Managers Index PMI of the month of December came at 49.9%, slightly less than forecasts of 50.0%. GBP/USD currently trades at 1.20239 at the time of writing.

Amazon plans to eliminate 18,000 roles.

Andy Jassy, CEO of Amazon, said in a note to employees on Wednesday, January 4, that the company’s job cuts will affect more than 18,000 jobs. This layoff is a part of a workforce reduction that the company previously revealed in November 2022. Jassy said in a public staff note shared on amazon. Several teams were impacted, but most layoffs will be from Amazon stores and PXT organizations.

Oil prices continue to fall.

Oil prices continue declining amid increased concerns of a decrease in global demand due to recession fears and the high spread of Covid-19 cases in China. 

China witnessed a significant increase in Covid-19 infections. EU officials have stressed the importance of member states imposing Covid tests on those coming from China before entering their territory. The Chinese government admonished that mandating Covid testing for Chinese citizens is politically driven and threatened to respond similarly.

Today, oil has witnessed some positive movements. 

-WTI is currently trading at 74.65, a 2.59% increase.

-Brent Crude currently trades at 79.75, a 2.45% increase.

Expected Releases Today

Today, markets await the release of:

-The change in US non-farm payrolls issued by ADP at 13:15 GMT.

-US jobless claims at 13:00. :30 GMT, and the US Crude Oil Inventories data at 16:00 GMT.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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