Strong jobs report bolsters Fed campaign for huge rate hikes
by Zachary Halaschak, Economics Reporter |
| July 10, 2022 07:00 AM
The strong jobs numbers for June will only give the Federal Reserve resolve in its plans to send interest rates ever higher.
The economy added another 372,000 jobs in June — more than 100,000 more jobs than most economists had expected. The better-than-anticipated news gives the Fed a bit more leeway in pursuing big rate hikes because the labor market remains strong enough to act as a bit of a cushion.
“Certainly this data could suggest the Fed’s going to, more likely than not, continue along its path, especially given there was continued wage growth here,” Brian Marks, the executive director of the University of New Haven's entrepreneurship and innovation program, told the Washington Examiner on Friday.
The central bank hiked its interest rate target by a whopping three-fourths of a percentage point last month for the first time since 1994. The Fed typically raises rates by a quarter of a percentage point, or 25 basis points, so the June hike was comparable to three simultaneous rate increases.
Fed officials have also signaled that there might be another 75-basis-point hike in store for the central bank’s July meeting, meaning that in just two months the Fed will have essentially jacked rates up six times.
That dramatic action comes at a cost — slowing spending. While an economic slowdown is inevitable, the degree to which it slows is the million-dollar question for economists right now.
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https://www.washingtonexaminer.com/policy/economy/positive-jobs-report-fed-raise-interest-rates
