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Wall Street is betting that the Federal Reserve will not cut its policy rate until September as data appears to show the labor market is healthy despite fears of inflation rising and a drop in jobless claims, Reuters reported.
The consumer price index rose 0.4% last month, slightly higher than economists’ expectations of 0.3% – even as economic indices remained stable.
Last month, the Fed kept the short-term lending rate between 4.25% and 4.50%, and Federal Reserve Chair Jerome Powell told a congressional hearing Tuesday that he was in no rush to adjust its interest rate-cut policy.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell told senators.
“We know that reducing policy restraint too fast or too much could hinder progress on inflation,” he said. “At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.”
Central bankers are also keeping an eye peeled for any weakness in the labor market that could bring about an interest rate cut, Reuters reported.
A government report on Thursday showed the number of Americans applying for unemployment benefits fell last week, showing signs of stability in the labor market.
