Business News

The collapse of the unemployed population is leading to a rapid rise in the Fed stimulus

[ad_1]

The sharp decline in the unemployment rate in the US has set the stage for the Federal Reserve to accelerate its reinstatement program this month, economists have said, making it possible to raise interest rates as early as next year if necessary.

The largest economy in the world he added 210,000 jobs in November, about half the speed expected by economists and less than last month.

But a dramatic change in the unemployment rate, which fell 0.4 percent to 4.2 percent, as well as the American working population again, confirmed that the Fed would continue in less than two weeks with extreme violence. time to withdraw his treatment.

“The performance report gives them a cover to announce the fast-track approach,” said Margaret Kerins, chief financial officer at BMO Capital Markets. “They need to go down as fast as they can to be ready to move quickly so that prices can be stable and so that inflation is not stable.”

“It is a risk management strategy, and the risk of rising prices now exceeds the operational risk,” he added.

Jay Powell, the newly elected Fed chairman, said in a press conference this week to do so. help The central bank is considering ending its procurement program more than it announced last month.

At the last policy meeting in November, the Federal Open Market Committee announced a reduction of $ 15bn or “taper” of the $ 120bn buy bond policy, meaning the Fed will stop increasing its investment volume in June.

Powell expressed his support for the possibility of ending the project “maybe a few months soon” – a sea change that is clearly supported by other Fed officials.

Mu a interview by Financial Times on Thursday, Loretta Mester, Cleveland Fed president and voting member of the FOMC next year, said she was supporting a rapid taper for the central bank to have an “optional” option to raise interest rates quickly to curb inflation.

The Fed has said it will not raise interest rates until it achieves a 2 percent inflation target, as well as a major overhaul.

The November performance report shows progress towards the final goal, said Sarah House, an economist at Wells Fargo.

“The labor market continues to be very strong,” he said. “Yes, we saw an alarming increase in pay. . . but the fact that the unemployment rate is declining and the number of participants is increasing, indicates that we are continuing to find more jobs. ”

Chart of the line of US employment,% showing Return to work?

The so-called co-workers’ numbers have risen sharply, according to analysts at Morgan Stanley, up 61.8 percent from 61.6 percent last month. Although it is still 1.5 percent lower compared to the prevailing epidemic, it was a welcome development after months of protests when workers were relieved by concerns about Covid and others.

The proportion of working-class workers in the “older” working class, which follows the average American working age group of 24 to 54 year olds, also made significant progress, reaching 78.8 percent. This is the highest rate since early 2020 with a leap from October 78.3 percent.

Economists also commented on a family survey in a November job report, which showed that employers rose 1.1m while 594,000 people took part. Family research is often seen as less volatile than “established” research, which results in many unspecified benefits.

Combined with middle wages and reduced unemployment among white and black workers, Kristina Hooper, a senior global market expert at Invesco, said the “good” jobs report prompted the Fed to move forward with its plans. .

“We will get more in December, especially since the first evidence we get about Omicron is that it is mild,” he said.

“A large part of Powell’s pivot has not increased so much that we have a quick taper, but that [may mean] interest rates rise sooner than expected especially based on the Omicron brand. ”

Interest market rates, as Fed funds compare in the future, indicate that the central bank will raise prices almost three times next year. Barclays wrote a pencil in May, with Evercore ISI and Goldman Sachs expected in June.

[ad_2]

Source link

Related Articles

Leave a Reply

Back to top button