It's a flip from the past three years when the too-hot labor market was a reason to keep rates high.
Share on linkedin Federal Reserve chair Jerome Powell arriving to testify before the Senate Banking, Housing, and Urban Affairs Committee on Tuesday. Photo: Chris Kleponis/AFP via Getty Imagessuch that the job market alone is no longer a reason to keep rates high — in fact, doing so might hurt the economy.It's a flip from the past three years, when the Federal Reserve pointed to a too-hot labor market as a reason for the central bank to keep downward pressure on the economy.
That era is well in the past, with further proof that elevated interest rates are weighing more on economic activity."The labor market appears to be fully back in balance," Federal Reserve chair Jerome Powell said at a congressional hearing on Tuesday. That, along with more benign inflation readings, helps make the case for a rate cut in the months ahead — perhaps as soon as September, at least if"As the labor market softens, the appropriate policy response is to begin lifting restriction, not holding the federal funds rate at this level even while inflation has fallen so much," Preston Mui, a senior economist at Employ America, wrote Tuesday.
The fact that monthly job gains were increasingly concentrated in a few sectors — namely, health care and government — was proof of a less-hot labor market, Powell said.Senators on both sides of the aisle pointed to evidence the economy is slowing as the Fed keeps rates at a two-decade high.
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