As the US employment indicators came out better than expected, the possibility of the Federal Reserve System continuing its strong tightening stance, such as a high base rate, has increased. According to an employment report released by the US Department of Labor on the 6th (local time), the number of employed 안전놀이터 (excluding agriculture) in the US last month increased by 223,000 from the previous month. Although the increase was smaller than in November, when the number increased by 256,000, it exceeded the forecast of experts surveyed by Bloomberg (an increase of 200,000). The Wall Street Journal reported, “Although the growth in the number of employed is slowing down due to signs of an economic downturn and the reduction of some large companies, the increase was greater than expected.”
The U.S. unemployment rate last month was 3.5%, lower than the previous month (3.6%). The unemployment rate is at the same level as before the corona, when it was at an all-time low. If the employment situation stays this good, the Fed is unlikely to stop raising rates. Not only is there no reason to worry about an economic downturn, but there is also the risk of rising wages, increasing consumption, and raising prices. The average hourly wage announced on the same day increased by 4.6% compared to the same month last year, showing a still high rise.
Prior to the release of the report, officials from the Fed made statements one after another, pouring cold water on the market’s expectations that a rate hike could be halted out of concern over a recession. In an interview with CNBC on the 5th, Kansas City Federal Reserve Bank President Esther George said, “Until we see signs that inflation is clearly beginning to fall toward (the Fed target) 2%, we expect the benchmark rate to remain above 5% per year. There is,” he said. When asked whether the base rate should be higher than 5% in 2024, he replied, “That is my opinion.” The current Fed base rate is 4.5% per year, but it should not be lowered throughout this year after raising it further.
Atlanta Fed President Rafiel Bostik also attended an event that day and said, “We will respond decisively to lower inflation to the target level.” The inflation rate of PCE (Personal Consumption Expenditure), the inflation indicator that the Fed refers to, is recording in the 5% range, which is more than twice higher than the Fed’s target of 2%.