Employment Cooling, Housing Slipping as Fed Continues to Combat Inflation

The nation’s red hot labor market cooled a bit in August, indicating that the Federal Reserve’s inflation-fighting efforts may be having the desired effect. But Fed officials aren’t declaring victory yet. Far from it.

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Although Fed Chair Janet Yellen admits that policy makers are baffled by persistently low inflation, they are undeterred by the failure to meet the 2 percent target they have set as the indicator that higher interest rates are in order, and still on track to boost interest rates once more this year.

Predictions that the Fed would increase interest rates at its June meeting were virtually unanimous, and the Federal Open Market Committee, the Fed’s policy-making arm, didn’t surprise or disappoint. 

To a summer that has been sizzling in many parts of the country, the Department of Labor’s July employment report delivered some additional heat.

Since the Federal Reserve boosted interest rates in March, additional rate moves this year have been pretty much a foregone conclusion. That the Federal Open Market Committee (FOMC), the Fed’s policy-making arm, will increase rates at its mid-June meeting remains the consensus view, but the conclusion is somewhat less foregone than it has been.