Inflation and Employment Data Sparked Optimism before the Fed Meeting

CEIC Gallery/World Economy - Global Database - March 9, 2016 Summary Key Fed officials raised optimism of the US inflation outlook after the positive data on labour market and inflation for January. Fed’s vice-president Stanley Fischer and the member of the Board of Governors Lael Brainard noted that the recent increase in inflation could be a first sign of moving inflation up towards the Fed’s inflation target. Positive data on inflation and labour market and the optimism expressed by the Fed’s officials come just before the Federal Open Market Committee (FOMC) meeting next week. Inflation and Labour Market
  • Employment in the United States has improved by better-than-expected 242 thousand jobs in February. Unemployment rate remains at 4.9%
  • In January headline inflation raised for the 4th consecutive month to 1.3%, while core inflation increased to 1.7%
  • Employment-to-population rate increased to 59.6% - the highest level since 2009.
Inflation Expectations
  • Despite the positive inflation data and labour market improvement, market-based inflation expectations remain low.
  • Five-year TIPS breakeven rate, the spread of Treasury inflation protected securities (TIPS) yield and Treasury notes yield, fell to 1.08% points, which is the lowest level since 2009.
  • Ten-year TIPS breakeven rate fell to 0.87% points.
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9th March 2016 Inflation and Employment Data Sparked Optimism before the Fed Meeting

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