OPINION: The latest US jobs report showed some weakness but whether that’s enough to keep the Federal Reserve’s rate decision on hold is dividing economists.
| Unexpectedly strong hiring across the US economy has put the Federal Reserve’s next rate decision on a knife’s edge, although some economists say any pause by the central bank this month will not last long.last week, allowing for another $US4 trillion in fiscal spending over the next two years, has worked to settle nerves about the US economy and on the sharemarket.
The closely watched broad measure of labour demand – the index of aggregate weekly hours – also declined for the third time in four months.Financial markets are now pricing in one further 0.25 percentage point rate rise, but the probability of that rise is split between June and July.
“One thing is becoming increasingly clear: persistently strong core inflation and a surprisingly resilient labour market will have the Fed hiking further, in our base case to 5.50-5.75.” “While the May employment report in isolation is unlikely to tip the Fed toward another rate hike at the June 14 meeting, neither does it lower the probability of more monetary tightening over the next couple of meetings,” Mr Ryan said.“A few signs that worker bargaining power is losing steam are showing up. Fewer workers are quitting jobs, the job-finding rate is sinking, and the duration of unemployment is rising.
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