T. Rowe Price's Chief U.S. Economist, Blerina Uruci, indicated that the U.S. economy is currently influenced by multiple factors simultaneously affecting both inflation and demand. Overall, these factors support the Federal Reserve maintaining its current monetary policy stance in upcoming meetings to assess the impact of rising energy prices and the effects of the easing in financial conditions since last year. Furthermore, although job growth has shown a declining trend in recent quarters, the unemployment rate has remained relatively stable, suggesting that some of the slowdown may be structural rather than a cyclical signal of a rapidly weakening labor market. This also supports the Fed's decision to hold steady for now and observe the further effects of these intersecting economic factors.

Uruci mentioned that the latest employment data showed a significant decline. The January jobs report may have overestimated economic strength, while the February report might have somewhat exaggerated the weakness. Overall, the unemployment rate has remained stable since the third quarter of last year. Additionally, the U.S. economy is being influenced by several factors, including inflationary risks from rising energy prices and a positive economic outlook supported by growth in consumption and capital expenditures. However, the slowdown in employment growth paves the way for the Fed to shift towards a more dovish stance in the second half of 2026. If oil prices decline in the coming weeks, the overall direction for interest rates should gradually trend downward.

The likelihood of a Fed rate cut in March is considered low, Uruci expects, due to potentially strong personal consumption expenditures inflation data for January in the short term and the Federal Open Market Committee's need to balance risks between its dual mandate. Looking ahead, T. Rowe Price anticipates the Federal Reserve will respond to economic data in a more dovish manner during the second half of this year. Uruci projects the possibility of 2 to 3 rate cuts in the latter half of the year, which is higher than the current market expectation of 1 to 2 cuts. Considering the policy path over the next 12 months, 3 to 4 rate cuts are also possible, indicating an overall stance that is more accommodative than market expectations.