Good morning. This is Jeff Sparshott with the latest on the economy. You can send questions, comments and suggestions by replying to this email.

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The Federal Reserve signaled it was thinking about when to lower interest rates but hinted a cut wasn’t imminent when it held rates steady at its first policy meeting of the year on Wednesday. The central bank held its benchmark federal-funds rate steady in a range between 5.25% and 5.5%, the highest level in more than two decades, as it awaits more convincing evidence that a sharp downturn in inflation at the end of last year will endure, Nick Timiraos writes.

For most of January, investors in interest-rate futures markets have placed roughly 50% odds that the central bank would cut rates at its next meeting, March 19-20. But Fed Chair Jerome Powell volunteered on Wednesday that officials didn’t think a March cut was likely. The next meeting after that is April 30-May 1.

The Bank of England is expected to hold its benchmark interest rate steady at the conclusion of a policy meeting. (7 a.m. ET)

U.S. jobless claims are expected to hold at 214,000 in the week ended Jan. 27, unchanged from one week earlier. (8:30 a.m. ET)

U.S. labor productivity in the fourth quarter is expected to advance 2.5% from the prior quarter at an annual pace. (8:30 a.m. ET)

S&P Global's U.S. manufacturing index for January is expected to tick down to a final reading of 50.1 from a preliminary reading of 50.3. (9:45 a.m. ET)

The Institute for Supply Management's manufacturing index is expected to tick down to 47.2 in January from 47.4 one month earlier. (10 a.m. ET)

U.S. construction spending for December is expected to rise 0.5% from one month earlier. (10 a.m. ET)

One big wrinkle for Fed Chair Jerome Powell and his colleagues: the glare of election-year politics. Fed officials insist politics won’t influence their decisions. That hasn’t stopped politicians or outside analysts from surmising that the election might nonetheless at least affect the timing of a cut, Nick Timiraos writes.

WSJ's Greg Ip looks at the pure economics: The Fed raised its target rate to 5.25% to 5.5% in July, held it there yesterday and suggested it might not cut until May. But the rationale behind 5%-plus rates is no longer operative: The Fed doesn’t have to push inflation down; it merely needs to keep it from going up. This can be achieved without weakening the economy or really high rates. And yet adjusted for inflation, “real” rates today are higher than in July.

For years, a little-known bargain has helped push down Americans' prices at the pump: cheap Canadian oil. But prices could climb when an expanded pipeline from Canada's oil sands to the Pacific Ocean starts funneling more of the country's crude to global markets. WSJ's David Uberti and Vipal Monga explain how the project promises to give Canadian companies more pricing power and boost the country’s position as a global energy powerhouse.

The 15% global minimum tax is here, and it is raising corporate tax payments—just not in the U.S. Johnson & Johnson, Baxter International and Zimmer Biomet are all warning investors that the 2021 international tax deal will make them pay higher taxes this year as Switzerland, South Korea, Japan and European Union countries implement the accord. WSJ's Richard Rubin, Jennifer Williams and Paul Hannon explain the holdup in America: Congress hasn’t changed U.S. tax law to conform to it. So for now, the U.S. isn’t directly collecting any money from domestic or foreign companies because of the deal.

• U.S. House Passes Tax Cuts for Businesses, Low-Income Families (Read)

Paper mills at home and abroad are gobbling up America’s recycled cardboard, driving up prices for old pizza boxes and other corrugated containers that they pulp and make into new packaging. The price of old corrugated containers, or OCC, surged during the pandemic e-commerce boom and then came crashing down in 2022 when rising interest rates prompted businesses to slow ordering and reduce inventories. Over the past year, though, OCC prices have rebounded, more than tripling in some parts of the country, Ryan Dezember reports.

China’s real-estate slowdown has dealt huge damage to the economy—and it’s getting worse. The country’s 100 largest developers recorded a deep slump in new-home sales in January, according to China Real Estate Information. They sold homes valued at $32.83 billion, down 34% from a year earlier and the worst month of sales since at least July 2020, when the data provider changed how it calculates them. The sharp contraction in home sales shows just how big the hurdles are for Chinese government officials trying to turn around an economy that is faltering on multiple fronts, Stella Yifan Xie and Cao Li report.

• Beijing Pledges More Fiscal Support as Economy Stumbles (Read)

Inflation in the eurozone ticked down in January, albeit by less than expected, complicating market expectations that the European Central Bank could soon start cutting interest rates. The bloc's consumer price index rose 2.8% on year, down from 2.9% in December, the European Union's statistics agency said on Thursday. Core inflation, which removes volatile energy, food, alcohol and tobacco prices, eased only marginally to 3.3% from 3.4% in December, Ed Frankl reports.

The modern economy rests on a rule so old that hardly anybody alive can remember a time before it: Ships of any nation may sail the high seas. Suddenly, that pillar of the international order shows signs of buckling. WSJ's Drew Hinshaw and Daniel Michaels look at security crises from the Red Sea to the Black Sea to the Horn of Africa that pose a troubling question: How much has freedom of navigation been an anomaly—and what's at risk for the global economy? Ships handle more than 80% of global goods, according to the U.N.

Real Time Economics comes to you from WSJ reporters and editors around the world. Today's issue was curated and edited by Jeff Sparshott (@jeffsparshott) and Greg Ip (@greg_ip) in Washington, D.C., and editors in London.

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