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Fed’s Urgency for Steep Rate Hikes Lessens After Wage Gains Cool

  • Labor force participation is rising and pay growth has slowed
  • Strong hiring gives Powell room to take a more steady approach
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Powell Says He Backs Quarter-Point Rate Hike in March

Jerome Powell’s push to limit the Federal Reserve’s interest-rate liftoff this month to a quarter percentage point was bolstered by unexpectedly stagnant wages amid strong hiring seen in February’s jobs report.

While employers added 678,000 to payrolls and unemployment fell to 3.8%, average hourly earnings were little changed from January. That’s a setback for workers, but it suggests U.S. central bankers aren’t facing an immediate wage-price spiral similar to the 1970s, which reduces the urgency to take bolder steps toward curbing hot inflation.