The Fed Should Move Slowly and Make No Promises
The jobs market has cooled — but inflation is refusing to cooperate.
One step at a time.
Photographer: Chip Somodevilla/Getty Images
Investors are confident that the Federal Reserve will lower its policy interest rate on Wednesday for the first time this year. Recent data support a modest cut, but the Fed would be wise to avoid signaling more reductions to come or pivoting decisively toward easing. For now, the data is too muddled for any such shift, and the central bank needs to keep an open mind.
The labor market is weaker than the Fed believed when its policymakers last met. Recent data revisions give much lower estimates of employment for the year to March, while the latest weekly jobless claims showed an increase to 263,000, the highest in four years. Those numbers are notoriously noisy, but the jobs market is plainly weakening.