Federal Reserve officials have signaled that the Federal Open Market Committee (FOMC) meeting on June 13-14 will suspend interest rate hikes and leave the card to resume interest rate hikes after that. sent in succession. The market is in turmoil ahead of the release of employment statistics in May.
Fed Governor Jefferson Suggests Suspension of Rate Hike in June – Doesn’t Mean End (2)
Jobs data has long been viewed on Wall Street as a key piece of data that influences monetary policy. But after Fed Governor Jefferson’s remarks yesterday, markets priced in a roughly 35% chance of a rate hike at this month’s meeting, down sharply from just under 60% the day before.
“There is no doubt that this is a signal, and it is highly likely that this signal is perfectly aligned with Chairman Powell,” said Rubira Falqui, chief U.S. economist at High Frequency Economics. “Just by looking at the market reaction to pricing, it’s clear that message is being delivered,” she continued.
Powell has said in the past that he believes there is room to wait for data and changing outlooks in making monetary policy decisions.
FOMC Raises Rates by 0.25 Points – Chairman Powell Suggests Suspension (3)
“In practice, by forgoing a rate hike at its next meeting, the FOMC will be able to see more data before deciding on the extent of further tightening,” Jefferson said yesterday.
But not everyone agrees with the moratorium on rate hikes. Economists at Monetary Policy Analytics, including former Fed Governor Lawrence Meyer, said in a report earlier in the day that the market was “overinterpreting” Jefferson’s remarks. With the number of job openings increasing in April, we see a relatively high chance of an interest rate hike in June.
U.S. job openings reach 10.1 million in April, highest in 3 months
Nonfarm payrolls are expected to have increased by 195,000 in May, but preliminary figures for this figure have exceeded the median estimate over the past year. Average hourly wages are expected to rise 0.3% from the previous month, but last month saw the biggest increase in almost a year. The unemployment rate is expected to rise slightly to 3.5% in May.
The ADP said on Thursday that May’s private payrolls surged more than expected by all economists.
U.S. ADP Private Employment Hits 278,000 in May – Exceeds All Expectations (2)
While Chairman Powell has suggested that “pain” is needed to keep inflation down, several officials, including Fed Governor Waller and Chicago Fed President Goolsby, said the relationship between the labor market and prices was not clear. Claim not so strong.US Consumer Price Index (CPI)It hit 9.1%, but the job market remains strong even though it fell to 4.9% in April.
“The market seems to automatically react hawkish in the immediate aftermath of a strong jobs report, but I think that’s too short-sighted,” said Luke Tilley, chief economist at Wilmington Trust. “Inflation has already been demonstrated to slow significantly while wages remain slightly stronger than pre-coronavirus. I think it is possible and should be done,” he said.
Original title:Fed Signal for Rate Pause Takes Pressure Off Hot Jobs Report(excerpt)
2023-06-01 19:03:00
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