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Economics

Fed’s Inflation Fight Spells Pain Ahead for ‘Tight’ Labor Market

  • Central bank forecasts unemployment to rise in next two years
  • Powell suggests workers have too much leverage on wages
A pedestrian on Market Street in the financial district of San Francisco, California.

A pedestrian on Market Street in the financial district of San Francisco, California.

Photographer: David Paul Morris/Bloomberg

The Federal Reserve projected its aggressive plan to fight inflation will drive up the ultralow unemployment rate -- an outcome Chair Jerome Powell says is needed in an overheated labor market full of imbalances.

“The labor market has remained extremely tight,” Powell said in the opening remarks of his Wednesday press conference following a meeting at which policy makers raised interest rates by 75 basis points and signaled more increases to come.