Institution: Powell's term comes to an end as he faces a 'delicate balance' between employment and prices

The institutional review of the January CPI report in the United States pointed out that the January CPI increased by 2.4% year-on-year, lower than the previous value and market expectations; After excluding volatile food and energy, the core CPI increased by 2.5% year-on-year, which is in line with expectations. The non farm payroll report released earlier this week showed that employment growth in January exceeded expectations and the unemployment rate dropped to 4.3%. Despite the favorable combination of slowing inflation and stable employment, the Federal Reserve still faces a delicate balance in the last few months of Chairman Powell's eight year term: to curb inflation without harming the labor market. The aggressive interest rate hike once repelled the price surge in 2022, but with inflation subsiding and the job market cooling down, the Federal Reserve has reduced interest rates by nearly 2 percentage points since the summer of 2024 and suspended them in January. As signs of weakening price pressure increase, economists generally expect inflation to further decline in 2026.