Key highlights:

• January activity data were generally on the soft side, consistent with our view that GDP growth would slow in the quarter. We still expect growth of around 2.0% q/q (annualised) in Q1.
• January inflation data – across a range of indicators – were much stronger than expected. January employment data were also stronger than expected.
• While we expect inflation is still trending back towards the Fed’s target, we have pushed back our expected timing for the first rate cut to June (from May). We now expect the Fed funds target range to be 4.25-4.50% by end 2024 (previously 4.00-4.25%) and to decline further in 2025.

Find out more in NAB’s US Economic Update (7 March 2024)