This statement was made after the latest employment report showed unexpected job market strength. However, Powell did not indicate that this strength would require higher interest rates.
Fed Officials Reassess Unexpectedly Strong Job Market
Powell and other policymakers are reassessing the unexpected strength in the job market, which was expected to weaken with the Fed's rate hikes. The January employment report showed a gain of more than half a million jobs and a drop in the unemployment rate to its lowest level since 1969. This has led to a reassessment in financial markets, with bond yields increasing and interest rate futures pricing for a federal funds rate of at least 5.1%.
Labor Market Concerns
Atlanta Fed President Raphael Bostic indicated that the central bank might need to increase borrowing costs higher than anticipated due to the strong job gains. Minneapolis Fed President Neel Kashkari also expressed concerns about the strong labor market, including fast growth in wages not consistent with the Fed's inflation target and a highly robust services sector.
