By Isaac Cohen*
The creation of only 160,000 new jobs in April, revealed last week by the Labor Department, confirmed the slowdown of 0.5 percent in US economic growth, during this year’s first quarter. Both figures supported the markets’ perception that the Federal Reserve will leave interest rates unchanged at its next June 14-15 meeting.
Monthly employment figures are subject to revision therefore they are not enough to support a decision. However, the employment figures for May will be released on June 3, which will reveal if job creation remains under this year’s monthly average of 203,000.
Meanwhile, a sigh of relief was heard in the markets, because so far this year the dollar has weakened 4.5 percent against a basket of currencies, which has led to strong stock market performances and to commodity price increases, including crude oil.
The Vice Chairman of the central bank Open Market Committee William Dudley, last week in a New York Times interview, said it is a “reasonable expectation” that interest rates will be raised twice in the remainder of this year. Vice Chairman Dudley, who is also the president of the Federal Reserve Bank of New York, added “we expect the rate path is likely to be quite gradual.”
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.