Weekly economic commentary: FOMC in no hurry

Summary

United States: FOMC in no hurry

• A hot reading on the CPI to start 2025 amplified worries that progress in getting inflation back to target has stalled out as new risks arrive from changing trade policy. Meanwhile, retail sales unexpectedly plunged in January, suggesting consumers tightened their belts to start the year.

• Next week: Housing Starts (Wed.), Existing Home Sales (Fri)

International: Global economic activity and price data are in the air

• This week saw the release of economic activity and price data across advanced and emerging economies. In the United Kingdom, fourth quarter GDP growth figures were somewhat underwhelming. In Norway, the economy slowed at the end of last year, and while inflation came in a touch higher than expected, we still look for Norges Bank to initiate its easing cycle in March. The Swiss CPI report was somewhat mixed, and although Brazil inflation eased a touch, it remains elevated, and we look for further Brazilian Central Bank tightening this year.

• Next week: Japan GDP (Mon.), Reserve Bank of Australia Policy Rate (Tue.), Eurozone PMIs (Fri.)

Interest rate watch: Mortgage rates likely will remain elevated

• We did not make any meaningful changes to the interest rate forecasts we published this week. We believe the 30-year fixed rate mortgage will remain elevated for as far as the eye can see, which will continue to exert headwinds on the housing market.

Topic of the week: The rising tide of employment among Black American community

• In commemoration of Black History Month 2025, we focus on recent labor market developments in the Black & African American community. We find that Black & African Americans have made meaningful economic progress over the past five years, resulting in higher labor force participation, employment and earnings.

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