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Fed will view April jobs report as signaling it does not have to rush to raise interest rates

Friday, May 04 2018
Fed will view April jobs report as signaling it does not have to rush to raise interest rates

Federal Reserve officials will be pleased with the April jobs report, saying it justifies their policy to gradually lift interest rates, economists said Friday. “It means they can be gradual. There is no rush,” said Michael Hanson, chief U.S. macro strategist at TD Securities. “The Fed still expects a pickup in wages and prices. But the market got ahead of itself how fast inflation is turning,” he added.

The economy added 164,000 jobs in April to push the unemployment rate below 4% for the first time in 17 years. Despite this, wage pressure softened. The 12-month increase in wages was 2.6% in April and the prior month’s reading was also revised down to 2.6%. Hanson said he defined gradual as quarter-percentage point rate hikes at the Fed’s meetings in June and September. A move in December is not in his forecast at the moment, he said. Many economists have that additional move penciled in.

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