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Fed Signal: Slowdown in Job Market to Test Fed's Unyielding Rate Policy
Summary: In a recent report, Fed signaler Nick Timiraos suggests that the recent slowdown in job growth over the past three months may open the door for Fed officials to consider a rate cut at their September meeting. This highlights the difficult balance they face amidst economic slowdown and rising inflation pressures. With the labor market ...
In a recent report, Fed signaler Nick Timiraos suggests that the recent slowdown in job growth over the past three months may open the door for Fed officials to consider a rate cut at their September meeting. This highlights the difficult balance they face amidst economic slowdown and rising inflation pressures.
With the labor market previously showing robust job growth, Fed officials had been comfortable maintaining rates unchanged this year. However, significant downward revisions in May and June job data have changed the landscape. Fed officials have indicated a reduced focus on overall job growth, as it has slowed in tandem with a slowdown in labor force expansion.
Even with a decrease in labor supply, the unemployment rate may remain stable or decrease even as job growth slows. However, Fed Chair Powell noted this week that stable unemployment may mask underlying weakness - a fragile balance when job seekers decrease and job vacancies decline simultaneously. He mentioned downward risks in the labor market six times during a press conference, hinting that actual weakness may provide a basis for policy easing.
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Link: Fed Signal: Slowdown in Job Market to Test Fed's Unyielding Rate Policy [Copy]
