U.S. financial conditions continued to ease last week, even as Federal Reserve officials pushed back against the idea of cutting interest rates early and often this year.
The Chicago Fed announced that its national fiscal condition index fell in the week ending January 19, marking the 13th straight week of declines.
The index is now lower than at any time since the final months of 2021, months before the Federal Reserve began raising interest rates to curb inflation. Monetary policy is thought to work primarily through tightening financial conditions.
A rapid and sustained easing of financial conditions could forestall a Fed rate cut by reducing the risk that rate hikes in 2022 and 2023 will lead to excessive monetary policy.
The economy appears to be accelerating in recent weeks. On Wednesday, S&P Global released the results of a survey of executives showing output growth. Accelerates to fastest pace in seven months. To apply for a home loan, climbing This indicates easing of financial conditions and will spur further growth in the future. Retail sales in December significantly exceeded expectations.
Fed officials, including Atlanta Fed President Rafael Bostic and Fed President Christopher Waller, have warned in recent weeks that the Fed is likely to move more cautiously than current market prices suggest.
