How US economy is faring on key economic fronts? All you need to know

US Fed rate cut: In its recent March policy meeting, the U.S. Federal Reserve chose to uphold its current benchmark interest rate range, holding firm amidst a backdrop of mixed economic indicators. US Fed officials are eyeing the potential for three quarter-point interest rate cuts by year-end, contingent on clear evidence of inflation moving towards their 2 per cent target.

Here's a closer look at key economic data points shaping the Fed's stance:

Inflation: The latest figures from the Personal Consumption Expenditures (PCE) price index and the Consumer Price Index (CPI) show that inflation has moderated but not to the desired extent.  While the PCE index rose modestly at a 2.5 per cent annual rate in February, core inflation edged slightly lower to 2.8 per cent. Conversely, the CPI showed a firmer uptick, reaching 3.2 per cent year-on-year in February, fueled by surging gasoline and shelter costs.

Employment: Despite a robust increase of 275,000 jobs in February, the unemployment rate was up to 3.9 per cent, highlighting a delicate balance in the labour market. Wage growth moderated to 0.1 per cent every month, though annualized figures remained elevated at 4.3 per cent, surpassing the Fed's preferred range.

Job Openings and Labour: The Job Openings and Labor Turnover Survey (JOLTS) underscored persistent imbalances, with job openings exceeding the pre-pandemic norm. However, the ratio of job openings to unemployed individuals has plateaued in recent months, signalling potential shifts in labour supply and demand dynamics.

Retail Sector Performance: January's retail sales figures revealed a setback, declining by 0.8 per cent amidst weakened consumer spending, particularly in the auto and gasoline sectors. This downturn, following a robust holiday season, raises questions about the sustainability of economic growth for the current quarter.