Jun 08, 2025

The latest data on the job market, inflation, and business sentiment indicate that current interest rates are appropriate for the economic conditions. Despite efforts to discourage business investment and hiring, the U.S. economy continues to perform well. Business sentiment indicators have shown improvement, suggesting a potential cyclical bottom. Inflation remains above the target rate, with larger risks on the upside, but there are no clear signs that interest rates are too high relative to economic and financial conditions.

The employment rate for workers aged 25-54 has been stable at a multi-decade high since the end of 2022, with minor fluctuations. While measures of underemployment are not as strong as in early 2023, they are still relatively benign. Any slight worsening in conditions occurred over a year ago, with minimal changes in the past 12 months. Despite potential future adjustments to interest rates, the current case for lowering them is weak based on the overall economic outlook and performance.

Federal Reserve officials may consider lowering the policy interest rate band in the future, but at present, the U.S. economy does not appear to require immediate action. With positive trends in job market stability, business sentiment, and inflation, there are no significant indicators suggesting that interest rates are misaligned with the economic landscape. The details of the data presented in the analysis point towards a steady economic performance, albeit with some areas for potential improvement.

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