Inflation, labour markets and the Fed: uncovering income opportunities

BEFORE delving into income opportunities, it is crucial to address the current state of inflation, as it remains a central focus for the markets. Over the past year, significant strides have been made in managing inflation rates. The core personal consumption expenditures index (PCE), the Federal Reserve’s preferred inflation gauge, has decreased from a peak of 5.6 per cent in early 2022 to around 2.6 per cent today.

While initial progress in reducing inflation was anticipated, the final steps towards reaching the Fed’s target are proving to be challenging. This difficulty has led to market fluctuations and adjustments in expectations regarding interest rates and the timing of the Fed’s rate cuts.

It is important to remember the Fed operates under a dual mandate: to ensure price stability through inflation targeting and to promote maximum employment.