US economic growth has been “modest” in recent weeks, employment growth has been “moderate” and inflation has slowed across most of the country.according to a Federal Reserve report released Wednesday.
“Nearly all districts indicated that companies renewed their previously unmet expectations that wage growth will slow overall in the near term,” said the US central bank in its last “beige book“, a summary of surveys and interviews in its 12 districts through August 28. “Most districts reported a general slowdown in price growth”he added.
The publication is known two weeks before the next Federal Reserve meeting, on September 19 and 20, in which monetary policy makers are expected to keep target short-term borrowing costs in the current range of 5.25%-5.5%but leave the door open for one last rate hike before the end of the year.
Rates: Crack between the Fed’s speech and the market
Financial markets consider that the Federal Reserve’s rate hike campaign, which began 18 months ago, has come to an end. But most of the Fed’s top officials aren’t convinced, at least for now.
They believe their 5.25 percentage point rate hikes since March 2022 are slowing the economy, limiting job growth, and most importantly, cooling inflation, which last year shot up to its highest level in 40 years.
Data since the most recent rate hike, at the end of July, tends to corroborate this view, with monthly employment growth averaging 150,000 jobs in the last three months, much lower than in the previous three months, and inflation, by the Fed’s preferred measure, was around 3.3% in July, down from 7% last summer.
This is why even a hawkish policy maker like Federal Reserve Governor Christopher Waller has come out in favor of a pause on rate hikes to allow time to carefully assess the new data.
Even so, prices continue to rise faster than the Fed’s 2% targetcompanies are creating many more jobs than the 100,000 needed each month to cope with population growth, and economic output seems to far exceed the annual growth rate of less than 2% which, according to Federal Reserve officials, is sustainable in the long run. All of this points to possible upward pressure on inflation.
So, while saying they are not under immediate pressure to raise rates, Federal Reserve officials are examining the data, including from the most recent Beige Book, to assess whether more credit tightening is still necessary to bring the inflation at 2%.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
