Since Federal Reserve officials last met in July, the economy has moved in the direction they hoped to see: Inflation continues to ease, if more slowly than most Americans would like, while growth remains solid and the job market cools.
. And the number of Americans who have started seeking work has jumped. This has brought labor demand and supply into better balance and eased the pressure on employers to raise pay to attract and keep workers, which can lead them to raise prices to offset higher labor costs.
Last week's inflation data underscored, though, that even a soft landing may not be a smooth one. On a monthly basis, consumer prices jumped 0.6%, the most in more than a year and 3.7% from a year earlier, the second straight such increase. “They're going to want to hedge that risk,” said Jose Torres, chief economist at Interactive Brokers. “Market participants are just a little too optimistic about inflation.”
But even more hawkish officials — those who typically prefer higher rates to fight inflation — are acknowledging that the Fed risks acting too aggressively and causing a recession. That represents a shift from even a few months ago, when the Fed's hawks worried more about doing too little to fight inflation.
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