Your Evening Briefing: More Good News for the Fed’s Inflation Fight

The US economy beat expectations in the last quarter of 2022, posting the kind of mild slowdown that the Federal Reserve wants to see as it attempts to tame inflation without choking off growth. Gross domestic product rose at a 2.9% annualized pace, down from 3.2% in the third quarter. A separate report on labor markets published Thursday also pointed to a resilient economy, rather than one on the verge of a slump, with weekly jobless claims unexpectedly falling. For the Fed, which has hiked interest rates at the steepest pace in a generation over the past year, the data suggest that there’s still a path to a “soft landing,” where tighter monetary policy cools spending and lowers inflation while avoiding a recession. But make no mistake: the US isn’t out of the woods yet. —David E. Rovella

Wall Street prognosticators seem to have settled on the Fed’s next rate hike coming in at 25 basis points. But Mohamed El-Erian, writing in Bloomberg Opinion, says the central bank should continue to go big. His broader analysis of economic and financial conditions favor a 50 point bump, he said. Here’s why.