Saturday 9 July 2022 11:01 am
The latest US jobs and wages report will push the Federal Reserve for a significant increase in interest rates to calm the economy and reduce inflation, the New York Times said.
The jobs report for June was surprisingly strong, confirming that the US labor market remains strong even as inflation warnings peak, the newspaper said.
But while the development is good news for the Biden administration, the Federal Reserve is likely to remain on its strong path to raising interest rates as it tries to calm the economy and reduce inflation.
Today’s rapid increase is troubling economic policymakers, who worry that an overheating labor market could exacerbate persistent inflation. Instead of treating the growing demand for labor as an undiluted commodity, they hope to create a gradual and controlled slowdown in employment and wage growth, both of which have been unusually strong.
The June jobs report provided early signs that efforts to calm the U.S. economy are leading to a slight moderation in job gains and wage increases, but employment and earnings remained strong enough to bolster the outlook among Federal Reserve officials, as did the labor market. The economy is out of control and employers still want more workers than are available.
A New York Times report last Thursday indicated that the US Federal Reserve is likely to avoid another 0.75% interest rate hike later this month as it seeks to rein in inflation, despite early signs of an economic slowdown and a growing recession. It was fleeting before it became a permanent feature of the American economy.
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