Traders of short-term interest-rate futures on Friday now expect the Federal Reserve to cut interest rates just one time this year, backing away from earlier bets on two rate cuts starting in June, after government data showed the labor market remains strong and a closely-watched survey showed a jump in consumers' inflation expectations.

This week’s forthcoming Consumer Price Index report could show easing year-on-year inflation, increasing the potential for Fed interest rate cuts in May or June 2025.

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump’s second term.

The U.S. economy added a smaller-than-expected tally of new jobs last month, but a sharp jump in wage growth and revisions tied to population changes and immigration make for a noisy report that might not indicate broader strength in the labor market.

The Federal Reserve left interest rates unchanged on January 29, and an interest rate cut is unlikely when the Fed issues its next policy decision on March 19, 2025.

The dollar index (DXY00) today is up by +0.05%. The dollar is climbing with T-note yields today after the hawkish US Jan payroll report reduced the chances to 8% from 16% for a Fed rate cut at next month’s FOMC meeting.