Fed Officials Flag Inflation Risks Amid Slowing US Hiring

Market participants are closely watching upcoming economic data and Federal Reserve signals as they anticipate possible interest rate adjustments. Euro zone bond yields saw a slight increase ahead of the Fed's Jackson Hole symposium, with flash PMI data from Germany and France expected to influence growth outlooks. In the U.S., minutes from the Fed's July meeting revealed most officials favored maintaining rates amid inflation concerns, despite some dissent advocating for cuts due to weakening employment, which has been impacted by recent firings at the Labor Department. Inflation pressures, partly attributed to tariffs implemented by President Trump’s administration, remain a significant concern, complicating the Fed's policy decisions. Meanwhile, in the UK, inflation hitting an 18-month high has diminished prospects for rate cuts this year, putting pressure on the Bank of England to maintain higher borrowing costs. Experts, including TD Cowen’s president, suggest that while rate cuts may occur eventually, they are unlikely to happen in the near term as central banks balance inflation risks against economic growth.