“Do more of what works and less of what doesn’t.” – Steve Clark
1. Fed Jerome Powell Says Fed on Track to Cut Rates This Year — Federal Reserve Chair Jerome Powell reiterated that he expects interest rates to start coming down this year, but is not ready yet to say when. Rate cuts won’t be warranted until officials have “gained greater confidence that inflation is moving sustainably” toward the central bank’s 2% goal, Powell told the House Financial Services Committee on Wednesday during the start of two days of testimony on Capitol Hill. Fed officials are trying to balance two risks: One is that they move too slowly to ease policy and the economy crumples under the weight of higher interest rates. The other is that they ease prematurely, allowing inflation to become entrenched at a level well above their 2% goal.
2. ECB Keeps Rates Steady – a June Cut Is Possible — the European Central Bank left interest rates unchanged on Thursday and kept the door open for cuts later this year. As with the U.S. Federal Reserve, the question for ECB President Christine Lagarde is how soon rates can start going lower. Economists widely predict a quarter-point reduction in June. Like the Fed, the ECB raised borrowing costs aggressively from 2022 to 2023 and has been on hold for about half a year now. Also similar to the U.S., inflation in Europe has continued to slow—the last reading for the euro zone was 2.6% in February. That’s still higher than the ECB’s target of 2%, but it has come down dramatically from a peak of more than 10% in October 2022. the big difference between Europe and the U.S. is the poor performance of the economy on the other side of the Atlantic. Growth flatlined in the second half. Germany, the biggest economy among the 20 countries sharing the euro, is in recession.
3. U.S. economy adds 275,000 jobs in February — outpacing forecasts — as unemployment rate hits 3.9%, even with downward revisions in December and January, the economy had added an average of 228,00 new jobs a month since last August. That’s very strong. In February, the household survey showed a sharp increase in the number of unemployed people and a decline in employment. As a result, the jobless rate climbed to a 25-month high of 3.9% from 3.7%. Employment growth in the previous two months were revised 167,000 lower than previously reported. That made the increase in February not quite as strong as it appeared.
4. White House Revives Plan to Save Homeowners Money on Closing Costs — the initiative aims to reduce one of the biggest costs associated with closing on a mortgage: title insurance. Under a pilot program, government-controlled mortgage giant Fannie Mae will waive a requirement for title insurance on mortgage refinancings it purchases from certain lenders.
The move reignites a fight with the industry over the cost, and necessity, of the insurance, part of the White House’s broader aim to chip away barriers to homeownership. The administration announced the program hours ahead of President Biden’s State of the Union address. The industry is dominated by a few big players, including the publicly traded First American Financial. The American Land Title Association, an industry group, criticized the plan as “a purely political gesture offering a false promise of savings for homeowners.” The group said it would expose consumers, lenders and taxpayers to greater financial risk.

The week ahead — Economic data from Econoday.com:

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